“The structure of our market is really strong.” Those were the takeaway words from Noah Blanton, President Oregon Direct with WFG Title Company in a recent presentation to Hasson Company Realtors.
What is he basing that opinion on?
He’s looking at the expected inbound net migration, lack of inventory and the number of homebuyers in the stage of peak housing consumption.
Let me explain.
Inbound net migration. While Oregon was seeing a positive net migration pre-pandemic, that trend has continued and been fueled by people realizing they could decide where they want to live and how they want to live thanks to working from home. Popular annual surveys find Oregon at the top of many lists of most popular states to relocate to. Mayflower lists Oregon as #3 and the United Van Lines annual movers’ survey ranked Portland as #10. So, we are importing demand for housing as well as having to meet the need that is already here.
Lack of inventory. December of 2021 saw the Portland metro area’s lowest inventory with only 0.6 months available which means that homebuyers were snatching up listings as fast as they were coming up. In the last 30 days there were 2,154 new listings in the Portland Metro Area and 2,556 new pendings, so 400 more pending sales than listings. Things definitely remain tight. What I found interesting in the presentation were some of the not-so-obvious reasons for our lack of inventory.
It seems that the amount of refinancing could be playing a role in this. Refinancing was incredibly popular among current homeowners last year with many taking out loans to build an office, an extra garage or an outdoor living area. It made more financial sense for them to refinance and add the improvements they wanted in a new home than to venture out into a competitive housing market looking for those things and perhaps having to pay much more for them. As a result, some current homeowners who otherwise might have put their homes on the market are deciding to stay put.
Another force affecting the supply is the fact that we are not building our way out of the issue. Only 31% of the housing units built in 2021 in the Portland metro area were for single family residences. The rest were for multiple housing units to meet another rising demand for rental housing. The increased cost for raw materials as well as for labor means that new construction is not necessarily an affordable alternative for homeowners.
Homebuyers at the peak of home consumption. When you look at the demographics of Oregon’s population, you see that the prime homebuyer age group (ages 25-54) is well represented and projected to grow substantially by 2029, with the 35-39 age group being the largest. These are folks in the “root setting” years so they will continue to drive the demand for housing.
Forecasters like Blanton believe that these market indicators make for a very solid real estate market foundation that will ride any economic cycle we may experience.
Things still promise to be challenging for buyers, but the good news is that people buying into the Lake Oswego housing market are buying into a good thing. While appreciation rates this past year were in the double digits, the average yearly change is +6.1% and that’s accounting for the housing market crash back in 2008 when values dropped 29% over the next three years. So even in buyer’s markets, homes in Lake Oswego continue to appreciate.
Another thing buyers should take into consideration when submitting offers is that 20% of all new listings in the last 30 days are “Back on the Market” listings which means that one out of five deals ended up falling apart so it’s wise to put yourself in a backup position on a house you really want. With odds like that, you could find yourself being moved up to #1 position with the seller coming back to you and asking if you’d like to buy that house you had your heart set on.
I’ll admit—getting into the real estate market during these times can admittedly be challenging which is why working with a hyper-local Realtor like myself can be the advantage you need right now. I received a Hasson Company Top Performer award for 2021 and have consistently ranked up there over my 30+ years as a Realtor in Lake Oswego. I’d love to put my experience to work finding you a home so you too can enjoy not just home appreciation but the quality of life that Lake Oswego offers. Give me a call at 503.939.9801, email me at email@example.com and/or check my website.