2016 was another impressive year for the Portland housing market, with a surplus of buyers and a deficit of sellers, which drove home prices higher across the board. So, can we expect to see more of the same in 2017?
Here are some of my thoughts on the Portland Metro market:
1. Jobs. The local housing market has benefited greatly from healthy job growth, and this is likely to continue, albeit at a slightly more tepid rate, through 2017. Economic vitality is the backbone of housing demand, so we should continue to see healthy employment growth next year. This will translate to additional demand for housing. Migration to the metro area from other states will also continue in the coming year, putting further pressure on our housing market.
2. Are we building too many apartments? Developers completed 3,700 units in 2015 and they will likely complete close to 6,500 new units in 2016 – an impressive increase. In the coming year, I expect to see rental rate growth start to slow and concessions return as developers vie for prospective tenants. Demand may exceed supply in 2017 but the market will remain fairly tight.
3. The millennials are here — and they are ready to buy. This year saw noteworthy increases in the number of Millennial buyers and I expect to see even more in 2017. The only problem will be whether they will be able to find – or afford – anything to buy.
4. Home prices will continue to rise. But I expect to see price growth starting to taper. The market has been on a tear since the technical bottom out in 2011, with average home prices up by an impressive 64 percent from the low, and 16 percent above the pre-recession peak seen in 2008. Given that interest rates are now likely to rise at a faster rate than previously forecasted, I believe there will be some slowing in price appreciation, but values will still increase at rates that are well above the national average. Look for home prices to increase by an average of 8.5 percent in 2017.