Oregon Housing Market Report - 2023 Update
What is the Oregon Housing Market Like?
The Oregon housing market has been following similar trends to the ones we have observed nationwide. In the wake of the COVID-19 pandemic, Oregon home prices increased rapidly as would-be homebuyers benefited from interest rates near historic lows and a newfound freedom to leave independently from their place of employment thanks to widespread remote work, fueling the demand for housing. Meanwhile, housing inventory was extremely low, driving Oregon home prices to new heights. However, the sharp increase in mortgage rates following the Federal Reserve Bank’s decision to hike the interest rate in an effort to fight back against inflation has put a sudden stop to their vertiginous upward trajectory.
According to data collected in October 2022, the latest available at the time of writing, the median home sale price in Oregon was $492,700, representing a 3.5% increase compared to October 2021. Although Oregon home prices are still rising, it is at a significantly slower pace than in previous months. Homes are also selling more slowly, leading to a slight increase in inventory. The median number of days on the market had increased to 31 in October 2022 from 16 the year before, bringing the number of homes for sale to 15,175, 5.1% more than the previous year.
Nevertheless, the inventory remains extremely limited. There were only 4,047 new listings in October 2022, 32.3% less than the previous year. There were only two months of housing supply, a slight improvement from one in October 2021 but a long shot away from the five to six months necessary to establish a balanced market.
How does the Oregon Housing Market Compare to the National Housing Market?
Oregon house prices are higher than the national average. Therefore, the sharp increase in interest rates has had a noticeable effect on housing affordability. The Federal Reserve Bank has been proceeding with several significant interest rate increases as its primary means of action against the raging inflation, which stands at a forty-year high. As of December 2022, the Fed has already announced its intention to continue increasing the interest rate until inflation slows down to a targeted rate of 2%. Therefore, it is highly likely that the mortgage rates will keep climbing in the near to mid-term.
At the time of writing, the interest rate for a 30-year fixed-rate mortgage is hovering around 7%, standing at its highest level since 2008 and almost twice the amount it was the year before. As would-be homebuyers find themselves priced out of the market by the combination of high property prices and high interest rates, the number of transactions has declined across the country, including in Oregon. There were 4,181 houses sold in Oregon in October 2022, 34.3% less than the year before. Homes selling above the listing price are also becoming rarer as house hunters struggle with the rising cost of borrowing money, with 25.2% of listings selling above the asking price compared to 47.4% the year before.
Oregon Metro Areas with the Hottest Housing Markets
Oregon is one of the most geographically diverse states in the U.S., marked by volcanoes, abundant bodies of water, dense evergreen and mixed forests, as well as high deserts and semi-arid shrublands. Therefore, it is no surprise that the state is taking advantage of its diversity, using it for various forms of agriculture, fishing, and hydroelectric power. Oregon is also the top lumber producer in the contiguous United States. In addition to the exploitation of its natural resources, Oregon has come out as one of the major players on the tech scene. Here are the hottest housing markets in Oregon in terms of volume.
Portland is, by far, the most populated city in Oregon, with a population of 652,503, according to the 2020 US Census. This port city has one of the largest commercial dry docks in the country and is the third-largest export tonnage port on the west coast. In addition to its maritime activity, Portland is a prominent actor in heavy industries such as scrap steel. Technology is a significant component of the city's economy, with more than 1,200 technology companies existing within the metro area. Finally, multiple athletic and outdoor gear and footwear manufacturers are headquartered in Portland. Despite a very minor drop in the median sale price, which went from $534,250 in October 2021 to $533,789 in October 2022, the Portland housing market remains competitive. Listings receive two offers on average, and 30% of them sell above the asking price. Homes sell rapidly, staying on the market for 24 days on average.
As of the 2020 United States Census, Eugene had a population of 176,654, making it the second most populous city in Oregon, and is one of the centers of education in the state as it is home to the University of Oregon, Bushnell University, and Lane Community College. Eugene's largest industries are wood products manufacturing and recreational vehicle manufacturing. The Eugene housing market is somewhat competitive. On average, listed properties receive two offers, and 26.5% sell above the asking price. Eugene home prices are still increasing, but at a significantly slower pace than in prior months, with the median sale price standing at $467,200, 2.6% more than in October 2021.
Salem is the capital city of Oregon and the state’s third-most populous city, with 174,365 residents in 2019. The state government is Salem's largest employer, but the city also serves as a hub for the area farming communities and is a major agricultural food processing center. The housing market in Salem is somewhat competitive. On average, listed properties receive two offers, and 31.4% sell above the asking price. Salem home prices are still on their way up, with the median sale price standing at $420,000, 8.2% more than in October 2021.
Higher Mortgage Rates Could Slow Price Growth in Oregon
Oregon house prices are relatively high compared to the national average. Therefore, the sharp increase in interest rates since early spring 2022 and the perspective of more to come in the short- to mid-term before inflation slows down to a targeted rate of 2% is likely to impact the demand as would-be buyers find themselves priced out of the market or may reconsider their homebuying plans until interest rates become more affordable. First-time homeowners who do not benefit from the equity built into selling another property are particularly affected, especially in high-value markets such as Oregon.
Although, at the time of writing, Oregon house prices are still higher than they were the year before, price growth has slowed down to a more sustainable pace. It seems likely that Oregon house prices will continue to stabilize or decline slightly as prospective buyers contend with the high cost of borrowing money. However, inventory remains extremely tight and keeps property prices relatively high.
Key Market Stats for the Oregon Housing Market
According to October 2022 data, some of the key market stats for the Oregon housing market appear as follows:
- Median home price: $492,700 – a 3.5% Y.o.Y. increase.
- Home sales: 4,181 – 34.3% less than a year ago.
- Months supply of inventory: 2 – compared to 1 in October 2022.
- Mortgage rates as of December 1st, 2022: 6.49%
Oregon Historic Price Changes and Affordability
Affordability is a major concern in the region as Oregon housing prices remain significantly higher than the national average. Like most of the country, Oregon house prices have increased consistently in the past decade, with the COVID-19 pandemic accelerating this upward trend. The median home price has increased from $363,500 in October 2019 to $492,700 in October 2022, with a peak of $528,500 in May 2022, representing a 35.54% increase in 36 months.
Although Oregon home prices increased at a slower pace than in other states, the residents’ income, particularly when taking into account the increasing cost of living and the price of borrowing money. At the time of writing, the tight inventory is sustaining moderate growth, and housing still needs to catch up with the demand. Therefore, a slower-paced growth or a slight decline is to be expected in Oregon housing prices in short- to mid-term.
- Oregon home prices have grown at a slower pace during the pandemic than in some other states but remain higher than the national average.
- The Oregon housing market is cooling down following the sharp interest rate increase, but Oregon house prices are still increasing at a slower rate.
- The Oregon housing market is still a sellers’ market featuring a tight inventory and a limited number of days on the market.