PORTLAND, Ore. (PORTLAND TRIBUNE) — The supply of homes for sale in Portland has declined 31.6 percent since last April, the largest drop of any major city in the country, according to a new report.
The resulting shortage has helped push Portland home prices up 15.1 percent in the past year, to an average of $325,400 — the second-highest increase reported by the April Zillow Real Estate Market Report. Only Denver was higher with a 15.2 increase.
The report also says the biggest decline in the Portland supply occurred in the most affordable homes. The number of homes in the lower third of the price range fell 39.8 percent since last April, compared to 39 percent for those in the middle third and 21.6 percent for those in the top third.
Although the situation in Portland is extreme, it is not unusual, says Dr. Svenja Gudell, the chief economist for the online real estate resource. According to Zillow, the number of homes for sale has dropped and prices have increased across the country. There were 3.4 percent fewer homes for sale in April than last year, and prices have increased 4.9 percent to $187,000. That’s faster than the 2 percent increase Zillow had previously predicted.
“The struggle will continue for home shoppers this summer,” Gudell says. “New construction has been sluggish over the past year; we’re building about half as many homes as we should be in a normal market. There still aren’t enough homes on the market to keep up with the high demand from every type of home buyer. In many markets, those looking to buy a home in the bottom or middle of the market will need to be prepared for bidding wars and homes selling for over the asking price. This summer’s selling season’s borders will most likely be blurred again as many buyers are left without homes and will need to keep searching.”
In addition to low inventory, the Zillow report says home prices are rising in response to a strong job market, higher-than-expected wage growth and persistently low mortgage rates.
Dave Nielsen, CEO of the Home Builders Association of Metropolitan Portland, says some local issues are affecting the Portland housing market.
“While there are some common factors our market shares with other markets facing similar issues around the country, two things that make our market worse are a lack of functional land supply and high government regulations and fees,” Nielsen says. “Our National Association did a study and found that, on average, regulations add almost $85,000 to the price of a new home. That amount has increased over 30 percent in the last five years, meaning government is accelerating fees and costs faster than people’s incomes are rising. The best thing government can do is to put more certainty into the development and building process, streamline regulations, and reduce fees and costs charged for new housing.”
Rents continue to rise
And Portland continues to have some the highest rents in the country, according to two recent reports.
Portland remained the 12th most expensive rental market in the nation in April, says a report released last week by Zumper, an online rental resource. The reports said the median price for one-bedroom apartments increased 0.8 percent since March to $1,340, while rent for two-bedroom apartments increased 0.6 percent to $1,620.
The Pearl District continued to be the most expensive neighborhood to rent in Portland, with $2,200 being the median month’s rent for one-bedroom units, the report said. The next most expensive neighborhoods were downtown at $1,650, Old Town/Chinatown at $1,600, and Corbet/Terwilliger/Lair Hill at $1,450. More affordable neighborhoods, priced below $1,100, were in the far south and eastern portions of the city.
Although the report said rents were fairly stable in April, they were still more expensive than in Philadelphia, Atlanta and Baltimore.
A new report by the National Low Income Housing Coalition says Oregon has the 18th most expensive rents in the country, with the highest rents found in Multnomah County.
According to the report, the average one-bedroom apartment in the county rents for $1,208. In order to afford that, a person would need to earn $40,840 a year. Those earning the state’s minimum wage of $9.25 an hour can afford to pay only $481 a month, the report says.
Like with housing prices, the report, titled “Out of Reach 2016: No Refuge for Low Income Renters,” found high rents is a national problem.
“We face an alarming and increasing gap between the housing needs of our nation’s lowest income households and what is affordable and available to them,” says Diane Yentel, president and CEO of the National Low Income Housing Coalition.
The Portland Tribune is a KOIN media partner.