Since it's a developing state that offers excellent job and income opportunities, good education, state-of-art healthcare, and many leisure options, Oregon is a strong market for real estate investments.
The local housing market experienced a decline this year, with home prices falling since January. According to Redfin's reports, the housing inventory is low, which gives sellers more negotiation power.
However, it's still a seller's market. Oregon's most populous cities, such as Portland, Eugene, and Salem, remain competitive and attract many buyers looking for the perfect home.
Both homebuyers and sellers are concerned about the future of Oregon's real estate market. Many wonder if it will crash this year, while others want to determine if purchasing a house in this state is a good idea.
Are you planning to buy a residential property in Oregon but need more information to make a sound decision? Do you want to know if investing in this state's housing market is still favorable? Read on!
Here are all the statistics, trends, and predictions you need to know before making a real estate purchase in Oregon.
Reports on the Oregon housing market issued in March of this year showed that home prices fell considerably.
Compared to last year's figures, the median price of a home in Oregon fell by 4.8% to $486,800. In addition, there was a drop in the number of homes sold.
The latest figures also revealed that homes spent more time on the market before going under contract, which is a sign of less competitiveness.
Oregon Housing Market Trends
Oregon is the country's 27th most populous state. Also, it has a strong economy. As a result, the demand for housing has increased over the years.
In addition, Oregon has some of the country's highest property taxes. Therefore, owning a home is costly.
Here's more information to understand the Oregon housing market trends and make informed decisions about real estate investments in this state.
Oregon Median Home Prices
As mentioned, the median price of a home in Oregon was $486,800 in March 2023, following a 4.8% drop compared to last year's figures.
In March 2022, homes in Oregon sold for a median price of $511,100. Therefore, the drop means more lower-priced residential properties were purchased last year.
However, the median price of a home reported in March of this year is the highest in the first quarter.
The Oregon real estate market had 12,121 homes for sale in March of this year after a 0.5% year-over-year rise. However, the number of new listings dropped.
According to Redfin's March statistics, only 4,767 homes were listed in March 2023, which accounts for a 30% drop year over year.
As a result, the average months of supply remained the same at two months.
Around 28.8% of properties sold above the list price in March 2023. Compared to last year's figures, it accounts for a drop of 27.1%.
Contrastingly, 24.9% of residential properties had price drops, up from 10.0% of houses in March of last year.
The sale-to-list-price ratio, which is the average sale price divided by the average list price, fell 3.6% year over year to 99.2%.
In March 2023, the number of houses sold fell by over 30% to 3,791 units. However, the figure shows that homeowners have sold 1,500 more properties than in January of this year.
Compared to March 2022 reports, the number of homes sold fell from 5,658 to nearly 3,800 at the end of this year's last quarter, which accounts for a 32.9% drop.
Median Days on the Market
The amount of time homes spent on the market before a real estate purchase transaction also increased.
In March 2022, the median days on the market was 14 days. However, it was up by 22 days in just one year.
Based on March 2023 reports, homes have been on the market for an average of 36 days.
According to SoFi's March 2023 reports, Oregon ranked 39th for the highest foreclosure rate, with 268 out of 1,798,864 homes in the Pacific Wonderland going into foreclosure.
On average, the foreclosure rate in Oregon is one in every 6,712 residential properties.
SoFi's data also showed that Union, Crook, Jefferson, Tillamook, and Malheur were the areas with the most foreclosure per housing unit.
Factors Affecting the Oregon Real Estate Market
The health of the state's economy, changes in demographics, high mortgage interest rates, and government policies can affect Oregon's real estate market.
Here's more information on each factor and how it influences housing demand, supply, and prices.
The real estate market of any state is highly dependent on the local economy, which varies based on different indicators, such as the employment rate, manufacturing activity, and Gross Domestic Product (GDP).
As mentioned, Oregon has a strong economy. However, like other states, it was hit by the Covid-19 pandemic.
Since inflation has not slowed down, experts expect a mild recession this year. However, many analysts explain that there's a near-term strength in the economy, specifically in terms of jobs, spending, and income. Therefore, forecasting a potential recession so far in advance is challenging.
Recently, Oregon's state economist Mark McMullen explained the relationship between a potential recession and the real estate market.
Mr. McMullen says the signs of an upcoming recession are different in 2023, as it'll be driven by a drop in housing and business investment in response to rising interest rates.
Mortgage Interest Rates
In addition to the state's economy, the Oregon housing market is also affected by the mortgage interest rate.
Many buyers aren't willing to make real estate investments due to rising mortgage interest rates, which are reaching record highs.
Redfin issued reports on the national average APR on May 3, 2023, revealing the following information:
- After rising 11 basis points in a week, the average APR for a 30-year fixed-rate mortgage was 7.011%.
- After rising 15 basis points in a week, the average APR for a 15-year fixed-rate loan was 6.228%.
- After rising 12 basis points in a week, the average APR for a 5-year Adjustable Rate Mortgage (ARM) was 6.095%.
The Oregon real estate market is highly influenced by government policies, such as those related to tax deductions, subsidiaries, and credits.
These factors can impact both the demand and the supply of homes in Oregon, one of the states with the highest property taxes.
Also, depending on the county, specific tax rates vary. Therefore, potential investors should analyze the state's policies to make sure they're making sound decisions regarding their real estate investments.
Essentially, demographics encompass data on potential buyers' age, race, income, migration patterns, and regional preferences.
The changes in demographics and the demand across different groups allow experts and investors to know the percentage of people who might buy a second or vacation home.
In addition, the composition of Oregon's population has a long-term impact on the real estate market.
According to the latest reports issued by Redfin, which include data collected from February 2023 to April 2023, over 3000 people wanted to move out of Oregon.
Will the Oregon Housing Market Crash Soon?
Many investors and homebuyers are also concerned about a potential real estate market crash in Oregon. However, experts insist that it will only slow down.
According to analysts, homeowners shouldn't worry about extreme situations, as expected fluctuations in the housing market aren't similar to what people saw during the Great Recession.
In addition, five facts show that the Oregon housing market is unlikely to crash. These are:
- Housing Demand Is Still High in Several Cities
The latest figures prove that there's still a strong demand for residential properties across various demographics.
Millennials in their prime buying years and Hispanics moving to Oregon are purchasing more homes.
- There Are Fewer Newly Constructed Houses
Experts explain that the supply of newly constructed residential properties must return to pre-2007 levels to have a significant effect on inventory.
Also, Oregon residents aren't interested in buying land and seeking regulatory approval due to the complexity of the process. As a result, the inventory remains low.
- There's a Low Inventory
There were only 12,121 homes for sale in Oregon a month ago. Although the average months of supply went up, it's still at two months.
A real estate market often crashes when the housing supply exceeds the number of buyers looking for properties.
Although the demand has fallen in this state, it's still strong, and the supply is low. Therefore, the Oregon housing market is unlikely to crash.
- Lending Standards Are Stricter
About 15 years ago, the criteria borrowers had to meet to get a loan was not strict.
In 2023, things have changed. Borrowers must make down payments, have a specific credit score, and meet other strict requirements to get a loan.
- Foreclosures Have Fallen
As mentioned, Oregon ranked 39th for the highest foreclosure rate out of 50 states, which means it's quite low.
Foreclosures have a negative impact on any situation. However, today's homeowners own significant equity in their properties and have more healthy assets, ample cash, and an appropriate amount of debt.
Oregon Housing Market Statistics
If you want to know if Oregon is a good real estate market to invest in, you should also consider the following statistics:
- According to Zillow, the average price of a home in Oregon is $485,475, which accounts for a 0.8% drop over the past year.
- In Oregon's largest city, Portland, the rental vacancy rate decreased by 0.8% to 4.8% in one year.
- As the national rate for last year's fourth quarter was 5.8%, Portland's vacancy rate fell below the national average.
- The Portland real estate market performed slightly differently. In this state, the inventory sat at a 2.6-month supply as of January of this year.
- About 0.21% of homebuyers searched to move into Oregon from other major cities.
- Based on December 2022 reports issued by the Bureau of Labor Statistics, the unemployment rate in Portland was 4.1%. That's a 0.6% increase compared to previous figures.
- The Survey of Consumers from the University of Michigan showed that customer sentiment fell from 67.2 to 64.9 in January of this year.
- Freddie Mac's latest reports revealed that the average commitment rate for a 30-year fixed-rate mortgage was 6.11% as of September 2022. In August of last year, it sat at 5.22%.
- ATTOM data solutions, a property data provider, said that foreclosure rates in the US are on the rise.
- As of March 2023, the number of homes with foreclosure filings was 36,617, which accounts for a 10% increase compared to last year's figures.
- The US median sale price of a home is hovering around $375,000.
- According to the National Association of Realtors (NAR), the home appreciation rate from August 2021 to August 2022 was 7.7%.
Oregon Housing Market Predictions
What's on the horizon for Oregon's housing market? Is it going to slow down?
According to the National Association of Realtors (NAR), existing home sales fell 2.4% in March of this year. Based on that data, these are experts' predictions:
Analysts predict that increasing interest rates may cause a 10% drop in home sales by 2024. In addition, experts believe that listings won't go out of the housing inventory at a faster pace.
March 2023 trends suggest that the median days on the market could rise by 10 days or more.
Mortgage Interest Rates
Many experts believe that mortgage rates will rise due to high inflation. Economists also expect a mild recession.
As a result, analysts believe that mortgage rates will increase to 7.70% for 15-year fixed-rate loans and 8.50% for 30-year fixed-rate loans.
Besides the drop in home sales, experts believe that property prices will fall by at least 5% this year. Unaffordability will likely be the main cause of this drop.
Oregon's inventory is still low, with only two months of supply. However, experts believe that it won't change unless prices rise or properties become unaffordable due to higher interest rates.
Additionally, experts predict that home affordability won't change significantly, as the drop in home prices won't be enough to offset an increase in interest rates.
Oregon Housing Market Forecast (2023)
Here are more predictions about the Oregon housing market:
- Zillow predicts that home values will rise in the coming year, saying that the one-year forecast for Oregon's housing market is positive.
- The Portland housing market is expected to experience a slight decline, with home prices falling by 0.6% in May 2023.
- Zillow also predicts that home prices in Portland will decrease by 2% in February 2024.
- According to Zillow's predictions, other regions will experience a slight increase, including Hermiston, Ontario, and Klamath Falls.
Oregon is a strong real estate market, so this state attracts many homebuyers. However, investors should be cautious and consider different aspects before purchasing a property there.
The latest trends and predictions show that there's still uncertainty surrounding the Oregon real estate market.
Frequently Asked Questions
Is Oregon in a Housing Market Bubble?
Many experts believe a housing bubble is imminent when home prices rise at a rate considered "unreasonable" due to a change in buyers' behavior.
However, while home values are typically high in Oregon, the state's median price of a house has fallen since August of last year. Therefore, many analysts say that there isn't a housing market bubble.
Is Oregon a Balanced Market? Is It a Good Idea to Buy a Property in This State?
Oregon's real estate market has experienced fluctuations in recent months. Although home prices have fallen, investors should be cautious when buying a house.
This state has one of the country's strongest housing markets. As mentioned, home prices are usually high. However, the latest trends show that it isn't stable.
Besides the latest trends and statistics, you should consider your budget and preferences. If you need more help, remember that you can contact experienced real estate agents and get a professional opinion on your potential investments.
What Causes a Market Crash?
Housing markets often crash when the supply is huge, but few buyers are willing to purchase homes.