Published April 15, 2020
Coronavirus’ impact on home sales: Portland buyers and sellers react differently
Before the coronavirus outbreak was widespread in the United States, the Portland area’s residential real estate market had a robust, early launch in 2020.
Instead of waiting for the traditional spring start, Portland area buyers jumped quickly into a competitive market with low inventory, as they did in 2019, to take advantage of historically low mortgage rates.
Between March 25-31, 94 residential properties sold for an average of 102% of the asking price, another indication that it’s a seller’s market as inventory remains low. During those seven days, there were 132 active listings and 126 homes went under contract with offers.
Homes priced below $500,000 are still selling quickly; however the jumbo market is at a stalemate. Mortgage options are slowing interest in homes listed above $800,000. Despite low interest rates, the jumbo loan market is almost completely gone, so higher-priced homes are going to struggle.
The average 30-year fixed mortgage rate was 3.36% on March 12, a slight increase from the prior week’s all-time low of 3.29%. The current low rates make the average house more affordable in 2020 than it was in 2019.
One setback for homebuyers is the lack of open houses. A survey conducted March 9-10 by the National Association of Realtors (NAR) found that nearly one in four home sellers across the country are stopping open houses, requiring potential buyers to wash their hands, use hand sanitizer, remove shoes or wear booties, or other changes due to the threat of spreading the coronavirus.
Few (3%) of NAR’s 1.4 million members said listings have been removed from the market due to the coronavirus pandemic. Factors in the housing market’s favor are low mortgage rates and pent-up interest in Oregon, the state with the largest housing shortage in the nation.
Portland area inventory, however, which was already low and giving sellers the upper hand, decreased to 1.9 months in February, a drop from January 2020?s inventory of 2.2 months.
About 13% more Portland area homes were listed for sale in February 2020 compared to last February, still demand continues to outpace supply.
Economists with the Federal Home Loan Mortgage Corporation, known as Freddie Mac, analyzed the U.S. housing supply and found in February that excluding the District of Columbia, Oregon has the largest housing shortage (a deficit of nearly 9%) followed by California (nearly 6%). A Freddie Mac survey released in February found that 42% of U.S. renters paid more than a third of their household income on rent – up eight points from April 2019 – compared to 24% of owners spending more than a third of their household income on their mortgage.
Still, vast majorities of renters and homeowners believe their current living situation is the most affordable option, according to the Freddie Mac survey.
An unprecedented number of renters (84%) believe renting is more affordable than owning, an all-time high for the survey and up 17 percentage points from February 2018. Half of all renters are finding it difficult to find affordable housing that is close to work, up 12% since April 2019.
Given low interest rates, 40% of renters reported in the survey that they plan to purchase a home and 46% of owners plan to renovate in the next several months.
House price growth is expected to continue to decline through 2021 with annual rates of 3.2 percent, 2.8 percent and 2.1 percent in 2019, 2020 and 2021, respectively, according to Freddie Mac.
