Portland, OR Real Estate Market Trends & Analysis [Updated 2020]

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The Portland real estate market has endured the same fate as the rest of the country during the Coronavirus pandemic. “Shelter-in-place” orders have all but brought real estate in Portland to a standstill over the last few months. However, much like we are seeing across the country, positive signs of activity are starting to become more apparent. In particular, the Portland housing market is the beneficiary of continued buying and selling. The activity (alone) is enough to get investors excited, but the most encouraging aspects of today’s market are the opportunities being created in the wake of the Coronavirus disruption. While what has transpired in recent months is nothing short of terrible, the disruption has seemingly created buying opportunities for investors to capitalize on down the road.

Portland Real Estate Market 2020 Overview

  • Median Home Value: $467,621

  • 1-Year Appreciation Rate: 0.6%

  • Median Home Value (1-Year Forecast): -2.0%

  • Average Days On Market (Zillow): 82

  • Median Rent Price: $1,975

  • Price-To-Rent Ratio: 19.73

  • Portland Metro Unemployment Rate: 3.5% (latest estimate by the Bureau Of Labor Statistics)

  • Population: 653,115 (latest estimate by the U.S. Census Bureau)

  • Median Household Income: $65,740 (latest estimate by the U.S. Census Bureau)

  • Percentage Of Vacant Homes: 6.78%

  • Foreclosure Rate: 1 in every 11,615 (0.8%)


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portland housing market

2020 Portland Real Estate Investing

The Portland real estate investing community has benefited from an overwhelmingly positive decade of growth. Nearly every indicator investors covet has improved dramatically since the first quarter of 2012. Flipping profits have increased, as well as home values and rental rates. Perhaps even more importantly, however, is the amount of demand that has persisted in the face of not only increasing prices, but also the pandemic. Despite years of appreciation and an economy held in check by “shelter-in-place” orders, prospective buyers are still looking to take action. When all is said and done, a lot has happened in a short period of time, which begs the question: Is Portland a good place to invest in real estate? The answer is simple: With the right strategies, Portland can be a great place to invest in real estate.

The demand for housing is promptly due to a lack of inventory and vacancies. According to Freddie Mac, “Oregon has the largest [inventory] deficit (nearly 9%) followed by California (nearly 6%).” As the largest city in Oregon, Portland is primarily responsible for the state’s insufficient housing supply. As a result, it is safe to assume demand is pent up and the presence of the Coronavirus has only exacerbated the situation. Buyers wanted to participate in the market before the global crisis, and they still want to today, which bodes incredibly well for the Portland real estate investing community.

Demand has left the door open for local investors to practice nearly any exit strategy. However, the demand combined with today’s real estate market combine to work highly in favor of a few particular strategies:

  • Buy-And-Hold Real Estate

  • Commercial Investing

  • Real Estate Investment Trusts (REITs)

  • Tax Lien Investing

While rehabs and flips remain a viable option, years of appreciation have detracted from profit margins in the area. It is absolutely possible to rehab, but the strategies listed above are currently better suited for today’s market and its subsequent conditions.

The Portland real estate investing community should first look to either start building or contribute to an existing rental portfolio. For starters, years of cash flow generated from tenants may be able to justify today’s higher acquisition costs. With a median rent price of $1,975, it shouldn’t take too long to offset years of appreciation. In addition to what already look like attractive rental rates, the lack of available housing and the city’s low vacancy rate should increase competition, allowing Portland real estate investors to increase their margins even further. Combined with record-low mortgage rates, buying a rental property could result in a great investment.

Outside of the immediate opportunities awarded to rental property owners, Portland real estate investors may want to consider tax lien investing. The wake of the Coronavirus is expected to result in financial hardships for millions of Americans. In the event many homeowners aren’t able to keep up with their taxable obligations, there may be an influx of opportunities across the country, and the Portland real estate market is no exception. Local investors who are able to familiarize themselves with the process today may find themselves with ample opportunities to capitalize on the market’s new landscape in the future.

Those investors who are slightly more risk averse, however, may want to consider the buying opportunities created by the Coronavirus in the stock market. Real estate investment trusts are almost all selling at a discount at the moment and offer some exposure to the real estate industry without buying physical assets. With the lingering impact of the Coronavirus still unknown, investing in REITs may be a great way to get into the market at a relatively low price and with substantially less exposure to risk.

2020 Foreclosure Statistics In Portland

With somewhere in the neighborhood of 247 foreclosures, the Portland real estate market has a relatively low foreclosure rate. Only one in every 11,615 homes appears to be in default, bank-owned or is currently on the auction block, which represents a minuscule 0.8% foreclosure rate. As recently as April, “the number of properties that received a foreclosure filing in Portland, OR was 80% lower than the previous month and 92% lower than the same time last year,” according to RealtyTrac.

To put things into perspective, the foreclosure rate in the United States is 1.0%, the lowest it has been in quite some time. It is worth noting, however, that April may represent the bottom, at least for the foreseeable future. If for nothing else, the presence of the Coronavirus is expected to increase foreclosure rates across the whole country. As “shelter-in-place” orders continue to stall the economy, more and more homeowners are expected to fall on hard times and have trouble paying their mortgages. While forbearance programs will help for a short while, they aren’t expected to last forever. When government aid ceases to prevent foreclosures on distressed homeowners, lenders will expect borrowers to come current. Those who aren’t able to make payments are expected to generate an influx of foreclosures all at once later in the year. Therefore, investors who position themselves well today and line up financing could find the latter half of 2020 to be a great time to acquire a deal.

2020 Median Home Prices In Portland

Today, the median home value in Portland is about $467,621, according to Zillow. That said, local home values are the result of several years of appreciation, and haven’t always been as high as they are. Exactly eight years ago (May 2012), the median home value was approximately $269,000; that means the city’s median home value has appreciated 73.9% in less than a decade.

Over the last 20 years, the highest appreciating neighborhoods in Portland have been:

  • N Interstate Ave / N Going St

  • N Williams Ave / N Alberta St

  • N Lombard St / N Interstate Ave

  • SW Naito Pky / W Burnside St

  • Piedmont

  • Kenton

  • N Ainsworth St / N Interstate Ave

  • N Vancouver Ave / N Beech St

  • N Killingsworth St / N Interstate Ave

  • NE 15th Ave / NE Alberta St

For a better idea of how the Portland real estate market has performed in recent history, it’s best to place it in context with the U.S. real estate market. In the same time real estate in Portland appreciated 73.9% (May 2012 to May 2020), the median home value in the United States went from $161,000 to $248,857, an increase of 54.5%.

The city’s median home value has appreciated at a much faster pace than the national average for the better part of a decade. The difference may be attributed to several factors, but the most prominent indicator appears to be availability. Supply and demand in the Portland real estate market has increased competition dramatically, and homeowners have been able to increase asking prices for quite some time.

It is worth noting, however, that the impact of the Coronavirus has yet to fully reveal itself, which begs the question: Will housing prices go down in Portland? Appreciation rates had already started to slow a couple years ago, but the second quarter of 2020 may be the first time prices actually drop since the Great Recession. Due, in large part, to the social distancing orders put in place, it’s been harder for prospective buyers to remain active on the market. As a result, the decrease in activity is expected to drop home prices by as much as 2.0% over the next 12 months, according to Zillow.

It is important to note that the drop is only expected to be temporary, which is my many people are asking the same question: Is it a good time to buy a house in Portland, Oregon? Once the economy gets up and running again, there’s a good chance prices will return to their peaks. Therefore, the current market environment may actually represent a great time to buy, for investors and traditional homeowners.

Portland Real Estate Market: 2018 Summary

According to Portland real estate news at the time, the city was on track to maintain the positive momentum it managed to build since the recovery got underway. Nearly every economic indicator was better off in 2018 than it was in the previous years. At the time, the Portland real estate investing community was the beneficiary of very attractive market conditions, not the least of which have lasted up to today.

Portland Real Estate Investing 2018

The median home value in the Portland real estate market, much like the rest of the country, made incredible gains in 2018. Around $413,300, median home values increased 0.7% from the previous year, and—at the time—were expected to keep growing.

Due, in large part, to the historically high appreciation rates, the city in the Pacific Northwest was able to cut back on its foreclosure rate in 2018. In one year’s time, foreclosure filings dropped 52.0%, and the trend has continued to today.

According to RealtyTrac, “The median sales price of a non-distressed home was $355,000.  The median sales price of a foreclosure home was $246,854, or 30% lower than non-distressed home sales.” That means investors who know where to look could save more than $100,000 on a home at the time.

Despite experiencing an inventory shortage like the rest of the country, the Portland real estate market was really strong in 2018. The right economic indicators were in place to support years of growth, and the city’s low unemployment rate made everything possible.

Portland Real Estate Market: 2016 Summary

  • Median Home Price: $356,700

  • 1-Year Appreciation Rate: 13.3%

  • 3-Year Appreciation Rate: 35%

  • Unemployment Rate: 5.1%

  • 1-Year Job Growth Rate: 3%

  • Population: 609,456

  • Median Household Income: $59,168

Portland Real Estate Investing 2016

The Portland real estate market was one of the hottest markets in the country in 2016. Real estate for Rip City became a commodity in a relatively short period of time, as home prices were outgrowing the national average at the time. Subsequently, life was good for real estate investors and homeowners. A combination of positive factors (new housing construction, employment and unemployment rates) helped boost the outlook of the Portland real estate market and transform it into what it is today.

As of July 2016, there were 1,404 properties in some stage of foreclosure. The number of foreclosures in the month of July was 2.0% lower than the previous month and 42.0% lower than the same period in 2015. The number of REO properties increased 12.0% from the previous month, but fell 42.5% from the same time a year earlier.

In addition to rising home prices and equity gains, a thriving economy helped push the Portland real estate market in the right direction. One-year job growth at the time surpassed the national average, as new jobs increased at a rate of 3.0% during the second quarter, compared to the rest of the country which grew at a rate of 1.9%. On the flip side, while unemployment was better than the previous year, it was slightly above the national average during the second quarter—5.1% compared to 4.9%.

The second quarter saw new home construction reach 63.7% above the long-term average, while single-family permits increased to 19.8%, compared to the national average of 10.6%. Although low housing inventory wreaked havoc across the nation, construction was on the rise relative to the previous year, suggesting the local inventory had already stabilized.

Portland Real Estate Market: 2015 Summary

  • Median Home Price: $291,300

  • 1-Year Appreciation Rate: 5.5%

  • Unemployment Rate: 5.7%

  • 1-Year Job Growth Rate: 2.6%

  • Population: 609,456

  • Median Household Income: $59,168

Portland Real Estate Investing 2015

By 2015, the Portland real estate market had taken the recovery and run with it. In fact, the Portland housing market was one of the hottest in the country at the time. The housing sector was supported by an equally strong job sector, allowing more activity to take place. Homeowners were particularly happy, as the median home price in the area was about $291,300, which was well above the national average. The average home price across the country was nearly $75,000 less than those in Portland. The valuation was a direct result of historically high appreciation rates across the country.

Portland was one of the few markets that outpaced the national average in terms of price appreciation in 2015. For nearly a decade, homeowners gained more equity than those living in other parts of the country.

One of the most encouraging aspects about the city in 2015 was the rate its population grew. That said; not many cities can claim to have done better since 2000. More people moving to Portland gave the city the demand it needed to prosper. According to the U.S. Census Bureau, the number of people residing in Portland at the time increased from 529,121 in 2000 to 594,687 by the end of 2013. Over that period, the population increased 12.0%, enough to make the city the 10th fastest growing city in that time.

Statewide, Oregon’s unemployment rate was the lowest it had been in six years. Unemployment across the whole state dropped from 7.0% to 6.7% at the time. Portland, in particular, played a big part in reducing the state’s unemployment rate, as the city boasted a 5.7% unemployment rate. The city had an unemployment rate of 6.5% just one year earlier. Workers found themselves with more job opportunities than before the previous recession.

Despite the strength of Portland’s housing market in 2015, the city remained affordable. By the end of last year, homeowners were accustomed to spending less than 15.0% of their income on monthly mortgage payments. In comparison to the rest of the county, the average homeowner typically allocated more than 16 .0% of their income to mortgage payments at the time.

portland-investing-stats

Portland County Map:

Map of Portland neighborhoods

Portland Real Estate Market Summary

The Portland real estate market was at the forefront of the latest recovery. No more than five years ago, real estate in Portland was one of the hottest commodities in the country. However, demand quickly outpaced inventory levels and continued to drive prices higher; so much so that the city actually experienced a bit of a slowdown about two years ago. While the rest of the country continued to appreciate, the Portland housing market experienced a temporary setback. Today, prices are expected to drop even further in the wake of the Coronavirus. However, the drop is expected to be short lived. If anything, the disruption has given traditional homebuyers and investors an opportunity to buy. Those who take action sooner rather than later could find the market more hospitable than people realize.

Have you ever wanted to invest in the Portland real estate market? Is Portland a good place to invest in real estate? Please feel free to let us know what you think in the comments below:

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