Portland homes for sale dip to lowest level ever as prices spike in bidding wars: ‘Cash is king’

Portland homes for sale dip to lowest level ever as prices spike in bidding wars: ‘Cash is king’

Portland metro has never had so few homes for sale as seen in November, handing even more power to sellers and forcing buyers to face bidding wars or wait for more owners to list their residential property, which requires them to have confidence that they can find another place to live.

The logjam is long familiar to home shoppers competing in the Portland-area market. Basement-level inventory has been pushing prices higher for years.

But in November, inventory fell again, to the lowest reported in the 30-year history of the Regional Multiple Listing Service (RMLS), and the average sale price reached $521,200, a 12.7{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb} increase over November 2019.

The 2,238 Portland metro homes put on the market last month were a 36.3{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb} plunge from the 3,515 listed in October, according to RMLS.

This graph shows the total active listings over the past three calendar years in the greater Portland, Oregon metropolitan area.RMLS

If sales continue at the same pace, it would take just one month to sell all the homes on the market, according to RMLS.

Six months of inventory is an indicator of a market balanced to both buyer and seller.

Inventory is calculated by dividing the active residential listings at the end of the month by the number of closed sales and homes proposed and under construction.

“Never on record have we had only one month of inventory,” says Dustin Miller of Windermere Realty Trust in Lake Oswego, reacting to the RMLS report. “We are still reeling. Fortunately, the median sale price [$457,000] went down a tad from October [$460,000], which is in part due to the number of high-end listings.”

Home sales

Portland Metro’s average and median home sale price since November 2012.RMLS

The median sale price is the point in the middle in which half of the properties sell at a higher price and the other half at a lower price.

When compared to the previous 12 months, the median cost to buy a Portland metro home jumped 6.5{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb}, to $435,000, according to RMLS.

“We are advising clients to list while inventory is still low, rather than risking that after a [coronavirus] vaccine is made widely available that folks might come to market at normal rates again,” says Melissa Dorman of Living Room Reality, who is licensed in Oregon and Washington.

“Higher inventory might decrease the heavy bidding wars we see right now,” she says, adding, “in no event do I see the Portland market trending down anytime soon.”

In November, 109 houses and condos sold for more than $1 million and 15 of those sold for over $2 million, says Miller.

“That can really skew the average sales price a bit, but if it keeps up, I would consider it a real trend, at least for the near future,” he says.

Two listings for more than $2 million sold quickly and for cash. “Cash is king,” says Miller.

Beth Benner of Living Room Realty predicts it will take much of 2021 at least for supply to catch up with demand. “Buyers are coming to Oregon from larger, more expensive cities,” she says, “as they can work from anywhere and Portland still seems ‘affordable.’”

In November, 2,745 residential properties in Portland metro changed hands, a 13{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb} decrease from the 3,155 closings in October 2020, but a 25.3{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb} jump from the 2,191 closings in November 2019, according to RMLS.

Benner also says first-time buyers working from home have found they need more space than a studio condo and the lowest mortgage interest rates in history can make a home payment less than rent, if the buyer has a down payment.

A 30-year, fixed interest rate is in the 2.7{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb} range as of Dec. 10, according to the Federal Home Loan Mortgage Corporation, known as Freddie Mac.

Some buyers, not wanting to miss an opportunity for rock-bottom rates in a market with little inventory, are offering full asking price or more. For that, they expect most of the repairs found during an inspection to be paid for by the seller, say real estate agents.

If repair negotiations don’t please the buyer, there could be a “sale fail,” in which the buyer backs out, and the property bounces back on the market, says Miller.

Ilyse Ball, principal broker of the I Realty team, RE/MAX Equity Group, has noticed buyers digging in their heels when asked to absorb the full cost of repairs.

“Buyers are less willing to take on updates and repairs. They are walking away if they feel a home needs work,” she said in May. “With prices rising over the past few years, people are getting pickier, and with stay-at-home conditions, it may be daunting for buyers to think about workers in their home.”

In Portland metro, the 2,557 homes with an accepted offer, called pending sales, in November dropped 20.1{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb} compared to the 3,199 offers accepted in October 2020, but were a 12.4{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb} jump from the 2,274 offers accepted in November 2019, according to RMLS.

The average time Portland metro residential properties were for sale last month before receiving an acceptable offer was 41 days.

Compounding shortages in homes for sale is a growing population, owners unwilling to sell during the coronavirus pandemic and September wildfires that destroyed more than 4,000 Oregon dwellings.

The biggest factor of not selling, according to national real estate database analysis, is concern of not finding another home.

Many home shoppers have widened their search and are moving out of metro areas.

Interest in suburban living, with homes on larger lots, has been growing for a few years, say real estate professionals, but the coronavirus amplified the desire for more square footage as well as a relaxing backyard to replace weekend getaways.

“The suburbs have clearly benefited this year from urban flight and the general implications from the pandemic related to work-from-home opportunities,” says Jim Arnal of Living Room Realty.

— Janet Eastman | 503-294-4072

[email protected] | @janeteastman

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