As we move through 2024, the real estate market in Portland, Oregon, remains challenging and unpredictable. The boom that began in the wake of the pandemic came to a grinding halt by mid-2022, driven by unprecedented interest rate hikes. Since then, the market has been marked by slow activity, particularly within the city limits, while the suburbs continue to see some growth. Now, as we approach the end of summer 2024, it’s clear that the market is in a state of flux, with inventory piling up and price reductions becoming the norm.
The State of the Portland Real Estate Market 2024: A Snapshot
The real estate market in Portland has been anything but stable since 2020. After a period of rapid growth, the market cooled significantly in mid-2022 due to the Federal Reserve’s aggressive interest rate increases. This led to a noticeable slowdown in the number of transactions, particularly within Portland city proper. By 2023, home prices in the city had stagnated, although the suburbs continued to see moderate growth. The first half of 2024 mirrored this trend, with sales and prices remaining flat in the city while the suburbs experienced slight increases.
As we moved into the summer of 2024, the market took another downward turn. By June and July, the market was notably slower than in the same period in 2023. Inventory levels rose, price cuts became more frequent, and many desirable homes struggled to find buyers. This downturn has left both buyers and sellers feeling uncertain about what the future holds.
Looking Ahead: Why There’s Still Hope
Despite the current challenges, there are reasons to be optimistic about the Portland real estate market as we head toward 2025. Here are two key factors that could help turn things around:
Interest Rate Relief on the Horizon
One of the most significant issues facing the market today is affordability, driven largely by high interest rates. However, there is growing anticipation that the Federal Reserve will begin lowering rates in the near future, possibly as early as this fall. Lower rates could provide much-needed relief to buyers who have been priced out of the market, making homeownership more accessible. Additionally, lower rates may encourage current homeowners who have been reluctant to sell to re-enter the market, knowing they can afford to purchase a new home with a lower mortgage payment.
Pent-Up Demand
The past two years of high interest rates have led to a significant buildup of demand. Many potential buyers and sellers have been waiting on the sidelines, hoping for better market conditions. This pent-up demand could lead to a surge in transactions once rates begin to drop. As more buyers re-enter the market, we could see increased competition for homes, which could help stabilize or even increase prices, particularly in the suburbs where demand remains strong.
Challenges and Considerations
While there are reasons for optimism, it’s important to recognize the challenges that remain, particularly within Portland city proper. The city has faced stagnant or even declining population growth in recent years, while its suburbs have continued to expand. This divergence has created two very different real estate markets within the Portland metro area.
Portland City Proper: A Struggling Portland Real Estate Market 2024
Portland city proper has faced a unique set of challenges in recent years, including a flat or declining population and some of the highest effective tax rates in the country. These factors, combined with a recent rise in unemployment, have created a difficult market for sellers within the city limits. While the suburbs continue to grow and thrive, Portland proper has struggled to attract new residents, leading to slower sales and declining property values.
The Suburbs: A Bright Spot
In contrast to the city, the suburbs surrounding Portland have continued to see population growth and strong demand for housing. This trend is likely to continue as more people seek the space and affordability that suburban living offers. As we move into 2025, the suburbs are expected to lead the way in terms of real estate growth, with home prices likely to increase more significantly than in the city.
Adapting to the New Real Estate Landscape
In addition to the economic and demographic factors affecting the market, recent changes to real estate commission rules are also worth noting. As of now, Gerritz Realty Group charges a 1.7% commission to sell a home. Importantly, we no longer include the buyer’s agent commission in our listing contracts. Instead, buyer’s agents are expected to submit their commission requests along with offers, making the process more transparent and negotiable.
While this change may seem significant, it’s unlikely to have a major impact on the overall market in the short term. Most buyers still prefer to work with Realtors to navigate the complexities of purchasing a home, and the commission structure is expected to remain stable for the foreseeable future.
What to Expect as We Approach 2025
As we look ahead to 2025, the Portland real estate market remains difficult to predict. However, there are reasons to be cautiously optimistic. Lower interest rates, combined with pent-up demand and ongoing population growth in the suburbs, could help stabilize the market and lead to moderate price increases in the coming year.
For those considering buying or selling a home, timing is everything. Sellers may want to wait until the spring, when the market typically picks up, while buyers could find better deals in the late summer or fall when competition is lower.
Ready to Navigate the Market?
The real estate market may be challenging, but Gerritz Realty Group is here to help. With over 20 years of experience in the Portland metro area, our team has the knowledge and expertise to guide you through the buying or selling process. Whether you’re looking to sell your home or find the perfect new place to live, we’re ready to assist you every step of the way. Click Here for an in depth look at renting vs buying in Portland Oregon in 2024.
Contact Gerritz Realty Group today at 503-347-2937 to schedule a consultation or learn more about how we can help you achieve your real estate goals. We look forward to connecting with you and helping you navigate the complexities of the current market.
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