You can expect to be competing with many other qualified buyers if you want to buy a house in the Portland Metro Area in 2022. You may be wondering: “But rates are rising?” Will that slow down the market? Yes, rates have been rising steadily and average 3.5% per week. The real reason for the increase in demand is the housing shortage in many Portland neighborhoods.
Although rates aren’t as favorable as they were in the past few years, they are still about where they were before the pandemic. If you can buy your next home before 2023, you may still get a loan with a rate under 4% but if inflation increases and the Federal Reserve does not return to buying mortgage-backed securities–something they did during the pandemic for the first time expect interest rates to continue to slowly creep up year after year for a bit of time. We have all grown accustomed to these low rates historically, but they aren’t the norm anymore and likely won’t be for long.
The sale prices will rise, but not as quickly as did in 2021.
This does not mean that sales will decline or remain flat. Oregon Economists predict an 8-11% increase in home prices annually over the next year, and then a 3-4% increase in 2023. However, the rise in rates will mean that buyers will have less buying power, which could lead to a slower pace of price increases. It is also difficult, not to mention unsustainable, to see 17% growth each year. Although 11% is more than you would like to pay, it might make the market more affordable for first-time buyers.
Sellers: Your home will still experience equity gains, but you should be realis
tic when listing. When you list your home, consult a pricing expert to ensure that it is not priced too high.
After April, there will be higher demand for vacation properties available for purchase or sale.
The interest rates for second homes will be the same as those of investment properties (non-owner occupied), meaning that they will be substantially higher. The down payment requirements for second homes will not change.
Due to the perfect storm that was work-from-home realities, American wealth and low-interest rates, we saw many homes being bought and sold in secondary market on the coast and at the lakes. As we move towards spring, however, it is possible that the buying appetite will slow down as people who are considering purchasing a lakeside cottage or beach condo may start to reconsider their options.
Rents will rise at the same time as mortgages.
People often ask “Are we in a bubble?” There are many factors that can lead to me saying “Not likely.” One thing that is certain is that rents are increasing at a faster rate than mortgages. A roof over your head is all that matters.
Potential homebuyers who are eligible for a loan will be willing to pay the same amount in mortgage income as they would in rental income if they can qualify. With few exceptions, renting is more beneficial than owning a house.
Condos and townhomes are more likely to sell than they were in the past.
A lot of qualified buyers are fed up with being outbid on single-family homes and may start to look at the condo or townhome market. There is 2.5 months of inventory for condos, compared to half a month for single-family homes. Sellers, take note that condo inventory has decreased in recent months which makes it an ideal time to sell your first home if your goal is to move on.
It is almost impossible to buy a single-family home in Portland for less than $500,000, but it is possible to consider condo-style attached homes. These homes are a great investment option and home for those who value location and condition more than lot size and independent walls.
Portland’s housing stock is very limited and it isn’t getting any cheaper. If we want to reduce the housing shortage, we need to build more. Rock-bottom interest rates are likely to be a thing of the past, but they aren’t so high that they should stop buyers from buying a home.
Sellers: It is a great time for you to sell your home to unlock the equity. However, price aggressively and do not overshoot your market. A hot market doesn’t mean that buyers will pay more if your home isn’t worth it. You can save money and keep your equity in your pocket by using a good discount real estate broker. In 2022, real estate is expected to continue its busy year.