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Is Portland The Hottest Real Estate Market For Investors In 2019?

Portland, Oregon Real Estate

Let’s take a look at the current state of Portland, Oregon. Then we’ll discuss the revolutionary opportunities in Portland, Oregon for real estate investors. Portland is home to around 600,000 people. However, the Portland real estate market in reality includes the more than two million people who live in the Portland metropolitan area. That makes Portland the second largest city in the Pacific Northwest. For a long time we’ve been hearing how the major housing markets in the Pacific Northwest (like Seattle and Portland) have been on fire with fierce competition and limited supply of properties.

Is Portland going to be one of the hottest real estate market for investors in 2019? Well, the Portland housing market is currently undergoing some changes. Property appreciation has slowed considerably over the last year or so. Even though home prices are rising more slowly, and sales are down, there’s still a lot of competition among real estate buyers in Portland. Anyone planning to invest in Portland real estate in 2019, should start early. In a tight housing market like Portland, it can take some time to find a property that meets all of your criteria. In this article, we shall discuss about the current trends in the Portland real estate market. We shall also discuss the 10 best reasons which make investing in Portland real estate in 2019 potentially profitable for new investors.

portland real estate market

Portland Real Estate Market Forecast 2019

According to the real estate information company Zillow, the median home value in Portland is $422,300. Portland home values have gone up 0.3% over the past year and Zillow predicts they will rise 2.5% within the next year. The median list price per square foot in Portland is $292, which is higher than the Portland-Vancouver-Hillsboro Metro average of $229. The median price of homes currently listed in Portland is $450,000 while the median price of homes that sold is $410,200. The median rent price in Portland is $1,995, which is higher than the Portland-Vancouver-Hillsboro Metro median of $1,900.

Portland Real Estate Market Forecast 2019

Graph Courtesy – Zillow.com

Portland Real Estate Market Trend 2018

Latest Portland real estate market trends show a 4% year-over-year rise in median sales price and a -0% drop in median rent per month. Trulia has 3,798 resale and new homes in Portland lined up for you, including open houses, and homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process. As per Redfin.com’s statistics, the Portland real estate market is very competitive. Homes for sale in Portland, OR receive 2 offers on average and sell in around 20 days. Hot properties in Portland can sell for about 1% above list price and go pending in around 7 days. The average sale price of a home in Portland was $415K last month, up 2.5% since last year. The average sale price per square foot in Portland is $247, up 2.1% since last year.

Portland Housing Market Summary:

  • Median Sales Price: $425,000
  • Price Per Sqft: $296
  • Homes For Sale on Trulia: 3,798
  • Median Rent Per Month: $2,090
  • Median Household Income: $53,517
  • Home Owners: 60%
  • Single Residents: 44%
  • Median Age: 37
  • College Educated: 53%
  • The median rent per month for apartments in Portland for Sep 1 to Oct 1 was $2,090.
  • The median sales price for homes in Portland for Jun 27 to Sep 26 was $425,000 based on 3,012 home sales.
  • Average price per square foot for Portland was $296, an increase of 5% compared to the same period last year.

As per a report published in Oregonlive.com, in June, the Portland area saw 3,187 home sales, a decline of 7.6 percent from a year earlier. The median sale price, meanwhile, climbed 7.2 percent to $417,900. There were more than 6,000 homes on the market, the most the metro area has seen since 2014. But if sales continue apace, that’s just a two-month supply, at least three months short of what’s generally considered a balanced market. Still, the bolstered supply of homes means buyers will have more leverage than they’ve become accustomed.  The slowdown hasn’t been felt evenly across the market. There’s still far more competition at price points below $400,000, where most buyers are looking for their first home. It’s become far harder to find buyers in the move-up and luxury price ranges.

Portland Real Estate Market Trend 2018

Graph Courtesy – OREGONLIVE.COM

Portland Foreclosures And Short Sales 2018

Foreclosures will be a factor impacting home values in the next several years. In Portland 1.3 homes are foreclosed (per 10,000). This is lower than the Portland-Vancouver-Hillsboro Metro value of 2.6 and also lower than the national value of 1.6. The percent of delinquent mortgages in Portland is 0.7%, which is lower than the national value of 1.6%. With U.S. home values having fallen by more than 20% nationally from their peak in 2007 until their trough in late 2011, many homeowners are now underwater on their mortgages, meaning they owe more than their home is worth. The percent of Portland homeowners underwater on their mortgage is 3.7%, which is lower than Portland-Vancouver-Hillsboro Metro at 4.2%.

There are currently 453 properties in Portland, OR that are in some stage of foreclosure (default, auction or bank owned) while the number of homes listed for sale on RealtyTrac is 2,471. In August, the number of properties that received a foreclosure filing in Portland, OR was 93% higher than the previous month and 29% lower than the same time last year. Home sales for July 2018 were down 16% compared with the previous month, and up 295% compared with a year ago. The median sales price of a non-distressed home was $417,500. The median sales price of a foreclosure home was $0, or 0% higher than non-distressed home sales.

10 Best Portland Neighborhoods With Highest Appreciation: From NeighborhoodScout.com

In the last 10 years, Portland has experienced some of the highest home appreciation rates of any community in the nation. Portland real estate appreciated 39.47% over the last ten years, which is an average annual home appreciation rate of 3.38%, putting Portland in the top 10% nationally for real estate appreciation. If you are a home buyer or real estate investor, Portland definitely has a track record of being one of the best long term real estate investments in America through the last ten years. NeighborhoodScout.com shows that during the latest twelve months, Portland’s appreciation rate, at 4.37%, has been at or slightly above the national average. In the latest quarter, Portland’s appreciation rate has been 1.47%, which annualizes to a rate of 6.03%.

  1. N Williams Ave / N Alberta St
  2. N Killingsworth St / N Interstate Ave
  3. NE 15th Ave / NE Alberta St
  4. N Ainsworth St / N Interstate Ave
  5. N Vancouver Ave / N Beech St
  6. Piedmont
  7. N Lombard St / N Interstate Ave
  8. N Interstate Ave / N Going St
  9. Kenton
  10. N Lombard St / N Greeley Ave

10 Reasons to Invest In The Portland Real Estate Market

Here are our promised 10 reasons to invest in the Portland real estate market. And no, we’re not going to cite things like the TV show “Portlandia” or vague things like “it’s hip and diverse!”

1. It Is a “Hot” Market for Millennials

One of the major factors driving the Portland real estate market is the fact that the city is hot with Millennials. Nor is it just students coming to Portland driving up prices in the Portland housing market. They want to buy homes in a family-friendly, cultural city, something many cannot afford to do in California.

2. The Likely Future Demographic Momentum

When a city sees people move there for work, this could include everyone from 25 year old grads to 50 year old mid-career professionals. The fact that the Portland real estate market is especially attractive to young adults trying to buy houses, means there will be a strong demographic momentum into the future as they start families, increasing the local population and the odds they’ll stay.

3. The City Lacks Room to Grow

One of the beautiful things about Portland is proximity to the ocean and the mountains, while much of the area is covered in protected forests. The downside of this is that the city lacks room to grow the way many inland real estate markets do. Developers could tear down older buildings and build skyscrapers, but that’s expensive compared to going five miles down the highway and building a new suburban neighborhood. The relative lack of room to grow keeps rents high in the Portland real estate market for both residents and commercial firms.

4. Property Is a Deal Compared to Silicon Valley

While Portland residents complain about the rent, Silicon Valley’s insane rents are pricing firms out of San Francisco Bay Area, and enough have moved north to get the area called Silicon Forest. Google’s moved both people and jobs here. Other tech firms followed suit, opening offices here or simply relocated. Increased demand for housing guarantees higher rental rates and property values. The Portland housing market could adapt somewhat by turning older single family houses into multi-family units or building micro-hotels; that certainly creates renovation opportunity for investors in the Portland real estate market.

5. Jobs, Jobs, Jobs

Portland may have a growing tech sector, but the overall job market is growing rather quickly, too. Oregon experienced the fifth fastest growing job market in the country between 2017 and 2018. When you look at only private employers, it came in second. Furthermore, most of those jobs are in the big cities like Portland. For example, when you look at logging and mining – traditional rural employers – Oregon only came in 9th in the U.S. This means many people are moving to Portland for work, whether or not they’re in the tech pool. In short, the wide range of jobs and growth in demand for labor are powering the Portland real estate market.

6. Work-Life Balance Is Better Here

Work-life balance is better in Portland. An estimated 7% of the population in Portland telecommutes compared to 2.6% nationally. The city’s high walk-ability score and somewhat better traffic than California’s cities are another plus, though many love the fact you can bike to work. And the music scene and art museums – and the time and money to visit them – and it is no wonder so many Silicon Valley refugees move to Portland. That’s driving up rents and property prices in the Portland real estate market.

7. The Massive Student Market

There are more than three dozen private and public universities within 150 miles of Portland. The University of Oregon and Oregon Institute of Technology both have massive campuses here. Student enrollment for the STEM and IT programs is exploding because graduates are entering the hot tech market created by Silicon Valley refugee firms. This means there is a strong Portland housing market for students in the vicinity of multiple campuses. Compare that to places like College Station, Texas – your property values and rents depend on the attractiveness of the one main school to students.

8. The Better Business Climate

If you ask people and businesses why they relocated to Portland, one answer is the lower cost of living. For many, the lack of a state income tax is another attraction. In national surveys on business friendliness, Oregon is middle of the pack. However, business friendliness is relative. In terms of effective tax rate, it beats Washington and California. In fact, Oregon beats California in every regard. Forbes Magazine came out with an article in mid-2018 describing how California is unsustainable.

Infrastructure is crumbling, and they build trains to nowhere instead of roads and dams people need. It is hard to run a water dependent industry when they’re rationing water for homeowners soon. We already addressed taxes, but regulations are insane. The new California rule mandating that businesses have at least one woman on the board by the end of 2019 is merely the camel’s nose under the tent; they could start mandating ethnicity based board membership, union or employee representation on boards and board membership based on sexuality.

A business could try to solve this by going private, or they can move their headquarters to Oregon. It is certainly easier to move a business and team north to Portland where their salaries go further, since the Portland real estate market is so much more affordable.

9. It Is Relatively Landlord Friendly – for Small Landlords

There’s an interesting situation in the Portland real estate market. If you own a large apartment building, you’ll find the Portland area difficult to manage because it is so tenant friendly. A small landlord with a single home for rent, though, is in a different category. People buying and renting out a single home in the Portland housing market will have a much easier time.

They don’t have to follow the same rules on renter protection like rental assistance payments if you evict someone without cause (like you’re going to rehab or sell the property). Rental rates for smaller landlords can go up more in accord with market rates instead of being capped around 5%. Regardless of how many properties you own, Portland has only discussed rent control – and seen significant opposition to it.

10. The High ROI

The median home price in Portland was around $400,000. Rents for a single family home hover around $2000 a month. And that number includes a massive number of two bedroom starter homes that command $1700-$1800 a month. To calculate the expected rental rates for a given property, multiply the square footage by $1.60. If you can find three and four bedroom houses or renovate a two bedroom into a four bedroom, you’ll have one of the premium properties on the Portland housing market.

Investing In The Portland Housing Market: The Conclusion

Portland Housing Market

If you are a beginner in the business of real estate investing, it very important to read good books on real estate. You must also learn from successful real estate investors who have retired early on in their lives by investing in some of the best real estate markets like Portland, OR. The Portland housing market is booming because the economy is doing well on its own and the area is head and shoulders above California’s deteriorating situation. The Portland housing market has experienced double-digit annual price growth in recent years. Home values rose 11.4% in 2016 alone, according to a report from the real estate data company Clear Capital. The home prices in the Portland, Oregon housing market have slowed considerably over the last few months. And that’s a good thing, from a sustainability standpoint.

Another hot market for investors in 2019 is the Charlotte real estate market. Charlotte is the largest city in North Carolina. The city proper is home to more than 800,000 people. The metropolitan area is even larger – home to roughly two and a half million people. It is one of the country’s fastest growing metro areas, and it was the second fastest growing city in the southeastern United States. Only Jacksonville, Florida was growing faster between 2004 and 2014. One advantage to living in a big city like Charlotte is the constant demand for homes. Buying a home in Charlotte is a better investment, depending upon several factors. There are so many major companies and professional sporting events that people will always be interested in residing here. Therefore, interested investors aren’t likely to allow the listing prices to get to low before they swoop in and take advantage.

Similarly, the St. Louis real estate market is red hot! Homes are selling fast because inventory is low, creating a banner selling season for homeowners looking to move. If you’re looking for an amazing opportunity, the St. Louis real estate market can’t be beat. There are many opportunities in the St. Louis real estate market to investors regardless of who you want to target for renting or selling a newly renovated home. St. Louis is old enough to have aging inner-ring suburbs. You can find redevelopment opportunities in suburbs like University City, home to Washington University in St. Louis. About 800 acres are slated for redevelopment in University City. Wellston is receiving funds from HUD specifically for redevelopment.


References:

Silicon Valley moving people and jobs here – and quality of life
https://www.entrepreneur.com/article/273822

Jobs
https://www.business2community.com/brandviews/upwork/why-silicon-valley-techies-are-rushing-to-the-pacific-northwest-02076366

Student market
https://www.business2community.com/brandviews/upwork/why-silicon-valley-techies-are-rushing-to-the-pacific-northwest-02076366

Business friendly
https://www.oregonlive.com/portland/index.ssf/2014/07/how_friendly_is_oregon_portlan.html

California is unsustainable
https://www.forbes.com/sites/thomasdelbeccaro/2018/04/19/the-top-four-reasons-california-is-unsustainable/#6f1366cd3a23

Hot with millennials
https://www.cnbc.com/2015/05/14/water-millennials-drive-portland-oregon-housing.html

effective tax rate
https://www.oregonbusiness.com/article/item/16045-is-oregon-good-for-business

Landlord friendliness
https://www.portlandmercury.com/news/2018/01/24/19626335/portlands-small-time-landlords-dont-have-to-follow-renter-protections

Rent control discussions
https://www.oregonlive.com/politics/index.ssf/2017/02/portlands_tina_kotek_explains.html

Home values and rents
https://www.zillow.com/portland-or/home-values/
https://www.rentjungle.com/average-rent-in-portland-or-rent-trends/

Portland population
https://en.wikipedia.org/wiki/Portland,_Oregon

Market Trends And Forecast                                                                                          https://www.zillow.com/portland-or/home-values                                      https://www.trulia.com/real_estate/Portland-Oregon            https://www.realtytrac.com/statsandtrends/or/multnomah-county/portland https://www.neighborhoodscout.com/or/portland/real-estate                  https://www.oregonlive.com/expo/news/erry-2018/07/e0965abdb71878/portlands-hot-housing-market-i.html https://www.redfin.com/city/30772/OR/Portland/housing-market


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