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Oregon housing market cools, but only slightly

As the U.S. Federal Reserve raises interest rates, homebuyers' prospective mortgage payments go up.
Kristian Foden-Vencil
As the U.S. Federal Reserve raises interest rates, homebuyers' prospective mortgage payments go up.

Even as interest rates rise, and prices start to level out, Oregon's housing market is still “red hot,” Realtors say.

Oregon’s housing market may have cooled slightly, but it’s certainly not cold. At least not yet.

“I like to describe the market as having gone from white hot to red hot, but it’s definitely in the cooling phase,” said Drew Coleman, founder of Portland-based Opt Real Estate and past president of the Oregon Realtors Association.

As the U.S. Federal Reserve continues to raise its benchmark interest rates — it raised rates by another 0.75 percentage points last week — mortgage payments go up, scaring some homebuyers away from deals they might have accepted had rates been lower.

The idea behind the rate increases was to cool prices off. And some Oregon markets are seeing that: According to data from Realtor.com, Deschutes County saw the most drastic dip in median listing prices, going from $777,000 in May to $707,000 in August. This region has some of the highest median listing prices in Oregon, thanks to housing demands in Bend.

Multnomah County also saw a slight dip, from $545,000 in May to $525,000 in August.

But these dips are negligible compared to what prices were before the pandemic. In May 2019, Deschutes County had a median list price of $523,000, and Multnomah County’s was at $461,000.

Homes are also sitting on the market a little longer than they were earlier this year. In Deschutes County, the median number of days that homes sat on the market in May was 29; it jumped up to 50 by August. In Multnomah, the median number of days went from 28 to 38.

“It’s trying to return to normal,” said Noah Blanton, president of WFG National Title Insurance Company’s Oregon office. “It’s trying to return to price appreciation levels and inventory levels that more approximate where we were in in 2019.”

Oregon’s inventory of active home listings started dropping right around the start of the pandemic, hitting its lowest point in January 2021. Inventory perked up again that summer, per usual seasonal trends, but it fell right back down by January 2022.

But August brought some promising numbers: There were close to 12,000 homes on the market in Oregon, an almost 3,000-home increase from the same month last year. Inventory still is nowhere near where it was in August 2019, when there were 18,300 homes in Oregon for sale.

Blanton says the housing market is like a pendulum: it’s going to swing as far as possible in each direction before it settles.

“So I think the big question is, how far is this pendulum going to swing to [get to] normal?” Blanton said.

And, how long? Coleman, of Opt Real Estate, says he’s got some idea. He looks at appreciation rates, which measure how much homes have increased in value.

“Nationally, the top 100 economists predict that 2022 will end with about 9.3% appreciation nationwide, and then cooling to a very typical historical 4.19% appreciation in 2023,” Coleman said.

Those predictions go even further: 3.12% in 2024, 3.46% in 2025, and 4% in 2026, according to the National Association of Realtors.

“Historically, we like a 3-to-5% appreciation rate,” Coleman said. “It helps homeowners gain equity in their investment, but it also allows people to enter the market much better than when a 20-to-25% appreciation rate happens.”

Coleman says Oregon’s most recent homebuyers shouldn’t worry about losing equity — that is, having their home’s value dip below what they bought it for — if they bought at the top of the market, when many homebuyers were making offers well above asking price.

“People who vastly overpaid for a home definitely could have a slight loss in equity if they did overpay above-and-beyond what the market would bear now,” Coleman said. “Over time, I would not be really nervous about that… Even if it takes a slight step backwards, usually over time, it does very well for you.”

Copyright 2022 Oregon Public Broadcasting. To see more, visit Oregon Public Broadcasting.

April Ehrlich is JPR content partner at Oregon Public Broadcasting. Prior to joining OPB, she was a regional reporter at Jefferson Public Radio where she won a National Edward R. Murrow Award.