Yet another year is coming to a close. I don’t know about you but 2018 FLEW by for me! It has been another busy year in the Portland market with loan interest rates remaining at historic lows, and thousands of new residents looking to buy.
This time last year, our market was coming off one of its strongest years in a decade. Everything seemed to be selling way over asking price and competition was fierce. Regardless of their budget, buyers had to put the gloves on and be ready for battle. Most of those who were selling their homes saw them go for top dollar, often within a few days. Our predictions at that time for 2018 have held true – continued demand for homes (though not quite as much as previous years) combined with rising interest rates and a slight increase of available listings brought some relief to buyers who were used to getting outbid. By this summer, it became clear that homes were not selling as fast (or for as much) as they had been. Many sellers however, were still pricing their homes based on market conditions of a few months earlier and found a price deduction or two was needed before they found a buyer.
These changes are perfectly normal considering the massive appreciation in real estate values we’ve had over the last several years – it couldn’t go on like that forever! (And probably for the best that it doesn’t…who wants to see starter homes at $600k?!)
What can we expect in 2019? I anticipate rising interest rates throughout the year, which will likely increase the demand for homes under $400k as many may have to lower their budgets to buy. Many forecasts I’ve read predict mortgage interest rates will increase to 5.5% by the end of 2019. That would make the average home purchase 8% more expensive per month than in 2018. We should see continued population growth with plenty of buyers, and a further increase in available homes as they will likely take longer to sell with many still pricing them higher than the current market will bear.
Even with inventory increasing next year, unless there is a major shift in the economic trajectory, don’t expect a “buyer’s market” within the next five years as prices should slowly tick up and the inventory increase won’t be near enough to keep up with demand.
If you’ve thought about buying a home, it’s not likely to get more affordable in 2019. If you need a loan, now may be the best time before interest rates start climbing any higher. For anyone considering selling, it will be more important than ever to present your home well and price it correctly the first time to ensure predicable results. As we move into a more balanced market, homes won’t simply sell themselves anymore; you need a solid marketing plan with a great Broker who understands how to best position your home to sell.
If you’re ready to get a plan together, let’s talk about how you can best take advantage of our current market.