The Oregon real estate market serves as a testament to national housing trends. As one of the hottest markets in the country, real estate in Oregon owes a great deal of its recent success to inbound migration. The state of Oregon has netted a positive migration pattern for more than a decade, and there’s nothing to suggest the momentum won’t continue moving forward.
Combined with a strong economy, relatively affordable housing, some recent adjustments to single-family zoning laws, and a continuous influx of prospective buyers, Oregon should remain a balanced and active market. While the Coronavirus briefly threatened to cool down the local housing sector in the first quarter, established Oregon real estate market trends prevailed and used the pandemic as a tailwind. The disruption left behind in the wake of COVID-19 may actually play to Oregon's benefit, which bodes well for everyone participating in the market: buyers, sellers, and investors.
The Top Oregon Real Estate Markets
While the best real estate market in Oregon is up for debate, here’s a list of the cities investors may want to pay special considerations to:
Unemployment Rate: 6.9% (latest estimate by the Bureau Of Labor Statistics)
Population: 4,190,713 (latest estimate by the U.S. Census Bureau)
Median Household Income: $56,119 (latest estimate by the U.S. Census Bureau)
Percentage Of Vacant Homes: 9.19%
Foreclosure Rate: 1 in every 64,187 (0.1%)
Oregon Median Home Prices
The median home price in Oregon is $347,800. It is worth noting, however, that prices haven't always been as high as they are today. Much like the rest of the country, real estate in Oregon has experienced both ends of the price spectrum since the last recession. Values bottomed out around the first quarter of 2012 because of the Great Recession. Since then, prices across the entire state have proceeded to increase for about eight years.
Appreciation across the Oregon real estate market was most likely the result of the same factors driving national trends: a strengthening economy, improving confidence in the housing market, and a distinct lack of available inventory. The unique combination of these factors increased home values across the country, too. On a national level, the country’s median home value increased about 40.0% from bottoming out in the Great Recession. To put things into perspective, the median home value in the United States is now $243,225.
While the Coronavirus threatened home values in the first quarter of 2020, it would appear as if the housing market is ready to move on. In fact, the Oregon real estate market is firing on all cylinders, and the proof is in the home prices. Again, appreciation slowed at the beginning of the year, but several factors have come together to increase home values to historic levels. Increasing confidence in the housing sector, historically low interest rates, hopes of an impending vaccine, and a lack of available inventory have all created an impressive catalyst for buyers.
Activity has returned in droves, and homeowners appear to be the clear beneficiaries. The competition in the Oregon real estate market has enabled owners to increase prices, and people appear ready and willing to pay. As a result, it's safe to assume prices will continue to rise for the foreseeable future.
Oregon Foreclosure Trends & Statistics
The Oregon real estate market has developed a reputation for hosting a fairly low foreclosure rate. With one in every 64,187 homes in some stage of distress (default, auction, or bank-owned), the state foreclosure rate is an admirable 0.1%. Thanks—in large part—to the same factors that have facilitated the latest bout of appreciation across the state, the foreclosure rate in Oregon is something other states would hope to achieve sooner rather than later.
While Oregon has done well with foreclosures, some neighborhoods inherently have a larger distribution of distressed homes than others. Here's a list of the neighborhoods in Oregon with the largest distributions of distressed homes:
Tillamook: (1 in every 4,697)
Jefferson: (1 in every 9,951)
Clatsop: (1 in every 22,174)
Coos: (1 in every 30,870)
Polk: (1 in every 31,403)
Statewide, most of Oregon's distressed homes are bank-owned. More specifically, 55.6% of the state's distressed inventory is bank-owned, which means the loan originator has already repossessed the property. The remaining foreclosures are scheduled to be sold at auction. Therefore, any Oregon real estate investors looking to secure a deal below market value should consider looking for bank-owned homes or auctions in the counties listed above. Doing so will surely increase the chances of finding a foreclosure.
While the foreclosure rate in Oregon is low, it's safe to assume defaults will increase sooner rather than later. The financial strain placed on many homeowners by the Coronavirus is expected to increase defaults by year's end. It is too soon to tell just how many foreclosures are expected to hit the market within the next year, but there's a good chance Oregon will have more foreclosure in 2021 than there are now. Therefore, investors who position themselves well now may be able to simultaneously help homeowners in the future and land a good deal.
Tax Lien Investing
Tax Lien or Deed: Tax Deed state
Redemption Period: 3 years until the state can foreclose
Oregon Real Estate Investing
Years of historic appreciation have worked well for investors. The equity from homes purchased just a few short years ago has most likely made the majority of investments worthwhile. However, the Oregon real estate market (much like everywhere else), is getting to a tipping point. Homes have increased in value so much that attractive profit margins are growing harder to come by.
Outside of acquiring a foreclosure, homes are growing too expensive to flip. That's not to say Oregon real estate investors can't continue to flip homes (the absolutely can), but rather that the new housing market created by the pandemic is more suited for long-term investors. In particular, today's most prominent indicators appear to lean heavily in favor of rental property owners.
For starters, it has never been cheaper to use institutional money to buy a home. In an attempt to stimulate the national housing market, the Fed announced it would keep interest rates low to make buying a home more attractive. As recently as October, the monthly average commitment rate on a 30-year fixed-rate mortgage was 2.83%, according to Freddie Mac. At that rate, it's never been cheaper to borrow money. The lower interest rates associated with today's purchases will decrease monthly mortgage obligations. Investors who use today's rates may, therefore, increase monthly cash flow, and increase profit margins on long-term rental properties.
Today's landlords will also find their assets receiving plenty of attention. With a price-to-rent ratio of 15.66, affordability doesn't substantially favor renters or buyers. However, the city's distinct lack of inventory means more people will be forced to rent (even those who want to buy will be relegated to the renter pool). Demand for rental properties should increase for the foreseeable future, simultaneously lowering the risk of vacancy and increasing the amount of rent landlords may charge.
Investors are lucky to have several viable exit strategies at their disposal, but none appear more attractive than building a proper rental property portfolio in the wake of the pandemic. Too many important market indicators are pointing towards becoming a buy-and-hold investor in Oregon to ignore.
Oregon Housing Market Predictions
The Oregon housing market has done very well for itself in the last eight years. For the better part of a decade, in fact, real estate in Oregon has exhibited many of the same characteristics as its national counterparts. Price increases, confidence in the market, and several other indicators are in line with national trends, but what does that mean moving forward? What can the Oregon real estate investing community expect moving forward?
Secondary cities will receive more attention: Portland has seen demand increase dramatically in recent history. In doing so, prices have increased alongside the competition. It is now fair to assume secondary cities like Bend and Salem will start receiving more attention. Appreciation in smaller cities has yet to reach the same level as Portland, which will attract a lot of first-time buyers. Cheaper home values will then drive up competition in areas where it wasn't before.
Historic appreciation will continue: Despite the pandemic, real estate in Oregon remains red hot. As it turns out, pent-up demand was enough to maintain an active housing sector. However, there simply aren't enough listings to keep up with demand. As a result, sellers will increase asking prices to line up with the competition.
More people will move to suburbs: Cities were too expensive to begin with, and now they are hotbeds for the Coronavirus. Today, people who are permitted to work from home may start moving to suburbs to seek more affordable, roomier living situations.
The Oregon real estate market has been on fire over the last eight years, not unlike all of its West Coast counterparts. Since the Great Recession, nearly every economic indicator is better off than even just a few short years ago. Even the introduction of the Coronavirus couldn't interrupt positive Oregon real estate market trends. While uncertainty in the first quarter of 2020 may have stalled real estate activity, the setback was only temporary. Instead of resting on its laurels, Oregon actually used the disruption to its advantage. While inventory remains a problem, the housing market is doing really well, and anyone who gets in now will be happy they did sooner rather than later.
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