I get asked the ominous question regularly: Is Portland in Another Real Estate Bubble?
Onlookers don’t believe that Portland’s rate of growth and appreciation is sustainable. Buyers fear buying and the market collapsing. Sellers fear missing the height of the market or not being able to replace what they have even though moving makes a lot of sense. There are three good reasons not to fret.
Fear is Paralyzing Don’t Fall Victim to It
Reason #1 Not to Fret: People are moving to Portland in Droves!!!
117 People Move to Portland Every Day = Over 40,000 People Moved to Portland in 2016
The principal of supply vs. demand comes into play here. All these people need a place to live! Prices continue to rise because demand continuously outpaces supply.
As of January 2017, Portland has 1.7 months worth of residential real estate inventory which is reflective of a strong sellers market. That means that it would only take 1.7 months to sell EVERY residential property in the entire Portland Metro Area if not another property came on the market. Average 12 month appreciation in the Portland Metro Area as of January was 12%.
Reason #2 Not to Fret: Job Growth and Real Estate Prices Are Growing at A Similar Pace
As you can see from this graph, during the last bubble job growth trailed home price increases in Portland. That is not the case thus far in our current real estate market. This is an indicator that we are in a sustainable market at least for now.
Reason #3 Not to Fret: Average Growth Rate Does Not Exceed Historic Averages
Lastly, the Zillow graph shows us that during the last bubble real estate prices grew at a pace significantly faster than the typical rate of appreciation during a pre-bubble era (3.6% average annual growth). Prices are actually a bit behind what they would have been projected to reach if we stayed at a steady 3.6% appreciation rate from the 1980’s on. We actually still have some catching up to do!
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Onward and Upward!!!