Portland Market Pop?

Question

I recently had a house I was looking to purchase jump 75k in one week. It was enough to put me off buying and back into the research process. I came across this article (https://www.realestateconsulting.com/where-are-we-...) that points to Portland as being on the verge of a downturn

If the proposed phase 4 / 5 can take up to 3 years combined, I'm back to "predicting the future" and determining if today's lower rates and higher costs trump tomorrows potentially lower costs, but likely higher rates.

I've asked about opinions on the Portland market before, and generally have heard that prices will stagnate but not drop until perhaps four years from now once starts outpace the need.

Any other research I should consider before deciding if I should/should not buy high with low rates?

Mike Nuss · Answer

@Kevin Jorgensen I think the masses are less worried about an actual downturn/crash because the financials of 2018 are very different than 2006. Lending has been much tighter, building supply much slower (although speeding up past few years) and the market has a different kind of demand (as well as effective purchasing power of that demand). I've been saying the market will slow down for the past two years. It did a bit the past year, we're no longer the top 1-2 appreciating markets in the top 20 MSA (per Case schiller), but values have still been going up, just at a lower rate.

You definitely have reason to pause. Affordability is declining (and only gets worse as rates rise while prices continue to rise) and the tech sector seems to be slowing a bit, but migration is still happening and the financial basics of Portland are very strong.

Kevin Jorgensen · Answer

Thanks @Mike Nuss

I spent some time poking around the OEA site, and came across the following article: https://oregoneconomicanalysis.com/2017/12/14/why-...

It mentions that the housing starts across the state will increase from 24k/year to 30k/year to account for migration and what appears to be a miscalculation of shortfall since the recession.

From that I'm more inclined to believe in the slowing rate versus a drop in the near term. I couldn't tell where OEA predicated starts would match demand, but I've sent a request to see what they think that may be.

Appreciate the feedback.

Kevin

Kevin Jorgensen · Answer

Hi @Neal Collins

Is a new construction. I was in talks about the house, and in the third week of the talks the price raised 75k due to ‘design studio’ decisions.

My conundrum has always been that a down cycle in three years, even 20% drop, could still mean less buying power if rates go up.....my current home I naively bought at the peak in 2006, so hesitant to buy second home now with what feels like another peak (keeping first as rental).

Neal Collins · Answer

@Kevin Jorgensen What do you mean when the value jumped $75K in a week? Demand is still high in Portland, but we’ve seen a lot more price drops than we have in the past few years. This doesn’t pertain to the market cycle, but I definitely see purchasing power decreasing as the rates are inching up.