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As was pointed out, as long as Californians continue to move to Oregon, combined with a lack of housing inventory in Portland metro, Portland housing costs will be driven upwards. This is simple supply and demand.
From October through December, 267,000 people left California compared to just 128,000 who moved in, according to a study by the California Policy Lab. (No idea how it looked before or after that stretch...)
If even a tiny fraction of those folks seek Portland area housing, in a tight supply market, you will see the effects.
I feel bad for you guys. Maybe housing inventory will free up over the next few months and ease the constraints a bit.
We sold last month and moved out of state. I thought the home was worth $600k, realtor convinced us to list at $700k+, it got bid up to damn near $800k within 2 days. I wouldn’t want to be a buyer in this market.
I wish you good luck on the quest.
Whoa!! That's crazy. Was their something super special or unique with your old home? Just curious how it jumped up so quickly?
We are definitely seeing this effect in Central Oregon also. Bend has become a "Zoom town" with skyrocketing housing prices and not enough supply.
What I find interesting is the wages in Oregon and WA are not really going up any to keep up with the housing prices. I just saw an ad in Bend for a highly skilled technical worker where they were offering $17 an hour. The ad basically weasel worded it as "entry level" but if you read the requirements, they were looking for a somewhat experienced professional Engineer.
What I think is happening is the remote workers coming in from the Bay Area (and similar) are still being paid Bay Area wages while they are working remotely, and those wages are 2 to 3 times what wages are in OR and WA. This is sort of a deal killer for anyone with a local career being able to afford a house.
I was put into forced retirement (age discrimination) in the Seattle area a few years ago, and found the only way to move to Bend was to retire, after thinking I might be able to get a professional technical job here. We sold our Kirkland house for a meager sum (compared to its value now) and had to search and compromise to find a cheaper house in Bend. Since then, our house in Bend has almost doubled in value.
It is crazy! I remember when we moved here and I started following this forum that people in Seattle in Portland were counting on a bubble bursting then, before buying a house. How has that worked out? It is all definitely a gamble and no one has a crystal ball for RE.
Whoa!! That's crazy. Was their something super special or unique with your old home? Just curious how it jumped up so quickly?
Derek
We had a 1930s charmer that was remodeled to period style in a SW Hills forested setting. My initial estimates of worth were obviously way off, as I was unaware of the supply crunch. After realtor advised us on a higher list price, we ended up being bid about +10% over list. In looking at other sales prices in the area, that was not unusual in Feb/March.
When we were in the thick of this, we were scouting other listings and we basically had no competition in SW Hills at that price point. There was almost no supply during that stretch...while ambitious/hopeful buyers were everywhere.
As long as population is increasing housing prices will continue to increase. Only temporary panic selloffs which serve only to create pent up demand will interrupt those increasing prices.
So unless you live in an area of decreasing population banking on price deflation will be a losing gambit for anyone but an investor who can afford to time purchases.
As long as population is increasing housing prices will continue to increase. Only temporary panic selloffs which serve only to create pent up demand will interrupt those increasing prices.
So unless you live in an area of decreasing population banking on price deflation will be a losing gambit for anyone but an investor who can afford to time purchases.
Yep, this ^^^^^^^
I can't think of a place I've lived that has a growing population near any medium to large city that has not gone up. Sure, there are 'temporary' market corrections. But in the long run, values never go down and stay that way for any significant length of time. I remember on the CA forum ~ 10 years ago some forum folks were talking about the Bay Area being too high and predicting prices would go down. That it could become like the 'Rust Belt' and I laughed calling it BS. Of course, that never happened and the RE market did just the opposite. In ten years from now today's price will seem like a bargain as the population continues to grow and businesses embrace more remote options for their employees. Covid just accelerated that.
I can't think of a place I've lived that has a growing population near any medium to large city that has not gone up. Sure, there are 'temporary' market corrections. But in the long run, values never go down and stay that way for any significant length of time. I remember on the CA forum ~ 10 years ago some forum folks were talking about the Bay Area being too high and predicting prices would go down. That it could become like the 'Rust Belt' and I laughed calling it BS. Of course, that never happened and the RE market did just the opposite. In ten years from now today's price will seem like a bargain as the population continues to grow and businesses embrace more remote options for their employees. Covid just accelerated that.
Derek
Texas.
We lived there 13 years from 2003 to 2016 and saw very little housing inflation for much of that time despite the fact that the state was booming in population growth. Bought and sold 3 houses during that time and barely broke even on all of them after transaction costs and upgrades were counted. Probably actually lost money on the first two and made a little bit on the last one.
But that's because Texas has virtually no public lands and little regulation on construction or land use so giant new subdivisions would pop up seemingly overnight around every large city in Texas.
In the past few years there has been some housing inflation, mostly because construction costs have gone through the roof, but still not as much as on the coasts.
We lived there 13 years from 2003 to 2016 and saw very little housing inflation for much of that time despite the fact that the state was booming in population growth. Bought and sold 3 houses during that time and barely broke even on all of them after transaction costs and upgrades were counted. Probably actually lost money on the first two and made a little bit on the last one.
But that's because Texas has virtually no public lands and little regulation on construction or land use so giant new subdivisions would pop up seemingly overnight around every large city in Texas.
In the past few years there has been some housing inflation, mostly because construction costs have gone through the roof, but still not as much as on the coasts.
Interesting, I think what you've described could only happen in the greater Portland area under much more limited conditions. Namely, buying and selling like that within shorter periods of time every 3-4 years. In those cases, you're more likely to be affected by 'temporary' market downturns if/when they occur or relatively flat value growth for limited periods. But yeah, if supply is greater due to unlimited construction, that would certainly have an impact on values. Portland itself is less likely to experience that due to limitations on land use and fewer new developments. Supply is low by comparison while demand remains relatively high. Texas is more unique in that supply/demand curve.
I also wonder if you had stayed in the first house for that same length of time if you would have experienced greater increases in value? 13 years of growth, for example? Swapping out homes every fewer years is almost always more expensive than renting during that same period unless the market is really swinging upward at a faster rate like now. It takes more luck to gain equity or break even after buying/selling costs plus upgrades during those shorter windows.
The more interesting corollary in the PNW is Vancouver with so much open land to the north toward Ridgefield. We have fewer restrictions outside city limits. Yet even there, I don't see prices flattening out like Texas did until you get further away from larger cities. There is so much more undeveloped land in TX near larger cities compared to most states, especially on the west coast. That's also one of the big draws for many. Move to TX and get a big, new house relatively cheap because land is so cheap. They were building them like crazy and probably still are to some extent. Even with higher construction costs, location is the most significant contributor to overall value/cost. That also doesn't account for TX property taxes which is where the state is making up money in that kind of value proposition.
Derek
Last edited by MtnSurfer; 04-05-2021 at 02:20 AM..
Interesting, I think what you've described could only happen in the greater Portland area under much more limited conditions. Namely, buying and selling like that within shorter periods of time every 3-4 years. In those cases, you're more likely to be affected by 'temporary' market downturns if/when they occur or relatively flat value growth for limited periods. But yeah, if supply is greater due to unlimited construction, that would certainly have an impact on values. Portland itself is less likely to experience that due to limitations on land use and fewer new developments. Supply is low by comparison while demand remains relatively high. Texas is more unique in that supply/demand curve.
I also wonder if you had stayed in the first house for that same length of time if you would have experienced greater increases in value? 13 years of growth, for example? Swapping out homes every fewer years is almost always more expensive than renting during that same period unless the market is really swinging upward at a faster rate like now. It takes more luck to gain equity or break even after buying/selling costs plus upgrades during those shorter windows.
The more interesting corollary in the PNW is Vancouver with so much open land to the north toward Ridgefield. We have fewer restrictions outside city limits. Yet even there, I don't see prices flattening out like Texas did until you get further away from larger cities. There is so much more undeveloped land in TX near larger cities compared to most states, especially on the west coast. That's also one of the big draws for many. Move to TX and get a big, new house relatively cheap because land is so cheap. They were building them like crazy and probably still are to some extent. Even with higher construction costs, location is the most significant contributor to overall value/cost. That also doesn't account for TX property taxes which is where the state is making up money in that kind of value proposition.
Derek
We bought our first house in Texas (outside Waco) in 2003 for $195,000 new, sold in 2008 for about $230,000 because our jobs had changed and the commute was too far. Probably lost money on that sale because of all the landscaping and such we put into the new home. Zillow says it is now worth $340,000 so yeah, we could have held onto it for 18 years and made a little bit of money. That's about 3% growth and barely keeps up with inflation. With maintenance and transaction costs you'd be lucky to break even.
Or we could have dropped that $195,000 into an S&P 500 index fund back in 2003 and would have over $1 million now.
The Portland metro market is completely different from TX. You run into boundaries to growth in every direction. Either public lands or land with restricted development. Or geographic boundaries. None of that exists in Texas.
We bought our first house in Texas (outside Waco) in 2003 for $195,000 new, sold in 2008 for about $230,000 because our jobs had changed and the commute was too far. Probably lost money on that sale because of all the landscaping and such we put into the new home. Zillow says it is now worth $340,000 so yeah, we could have held onto it for 18 years and made a little bit of money. That's about 3% growth and barely keeps up with inflation. With maintenance and transaction costs you'd be lucky to break even.
Or we could have dropped that $195,000 into an S&P 500 index fund back in 2003 and would have over $1 million now.
The Portland metro market is completely different from TX. You run into boundaries to growth in every direction. Either public lands or land with restricted development. Or geographic boundaries. None of that exists in Texas.
Waiting to achieve that limited gain in TX was probably not worth the QOL issues especially when adjusted for inflation. Sometimes its better to take the loss and move rather than buy and hold.
There are many who advocate investing through other avenues over real estate. Nothing is a guarantee. But yeah, stocks would definitely had yielded more in that case. By contrast, there are hot areas of RE growth where some folks have made more significant gains. Heck, even the more popular parts of the PNW like Seattle, Bellingham, Bend and Portland. Could even include Cannon Beach and some other hot spots for tourists, etc... The CA market was crazy that way for folks who purchased modest homes near the more popular places like the Bay Area, San Diego, etc... then just lived their normal lives there prior to retirement.
We bought our first house in Texas (outside Waco) in 2003 for $195,000 new . . . Or we could have dropped that $195,000 into an S&P 500 index fund back in 2003 and would have over $1 million now.
Minus eighteen years rent.
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