Portland Metro Real Estate 2003 / 2004

New listings: up 2.2%
Home sales: up 10.7%
Avg. sale price: $222,500
Avg. appreciation: 5.6%

It should come as little surprise that the Portland area residential real estate market had a fantastic year in 2003. Last year was a record-breaking year in the Portland area as well as Clark County. New benchmarks were set for the number of homes sold and for total market volume. Demand was up, fewer homes were on the market, and mortgage rates spent most of the year at rock-bottom levels.

In Portland, 31,013 homes were sold in 2003. Representing a whopping 10.7% increase over 2002, home sales themselves only told half the story. The other big indicator for the market was that homes were not being put up for sale nearly so fast – only a 2.2% gain against the year-ago numbers. In all, 47,162 homes were put up for sale last year in Portland, creating a market that where demand for homes is outpacing the number being listed for sale.

Partially thanks to this phenomenon, the average sale price for a home in Portland jumped to $222,500 last year, representing a 5.6% appreciation rate. This is good news for both home sellers and home buyers. Though modestly rising in price, homes in Portland are still very affordable relative to other large metropolitan areas on the West Coast – and they consistently produce a measurable return on the investment.

2004 Outlook for Portland

2004 has opened to a healthy start in Portland with little sign of any mortgage rate increases on the horizon. The consensus among experts is that any rate increases will be marginal due to the election year. As the regional economy continues its recovery and jobless rates decline, demand for homes should remain on pace with 2003. With the market stabilizing, it is anticipated that more people will list their homes for sale rather than hunkering down in anticipation of a potential financial problem in their personal lives. This bodes well for the regional real estate market, as supply should increase to meet the continuing healthy demand.

While 2004 may not exceed last year's record shattering real estate market, home sales activity should remain brisk. Home price appreciation on the market level should remain in the healthy 5% range.

Vancouver & Clark County
New listings: up 0.2%
Home sales: up 21.5%
Avg. sale price: $196,700
Avg. appreciation: 7.8%

There were 7,673 homes sold in Clark County in 2003 – a new record, easily beating 2002’s mark of 6,747 closed sales. Year-end sales for residential properties throughout the Clark County area were up a remarkable 21.5% for closed sales (see attached graph). Largely due to steady appreciation of average and median home sale price throughout the year, the total dollar volume in Clark County ballooned to $1.5 billion, another new record. This figure represents a 25% leap over 2002’s then record $1.2 billion in closed sales. As one of the largest real estate firm in Clark County, Coldwell Banker Barbara Sue Seal Properties figured into nearly 15% of this volume.

Many Realtors in Clark County point to the influx of Oregonians into market as being the decisive factor in the boom. It is no secret that Clark County is a huge growth area, driven by its status as a tax haven, affordability relative to Portland, and exceptional schools. Some Realtors report as much as half of their clients are moving from the Portland area.

The average sale price of a home in Clark County increased a healthy 7.8% to $196,700. Homes appreciated at a higher rate than almost anywhere else in the area. For comparison, the Portland metro averaged a 5.8% increase. The areas with the highest appreciation over the course of 2003 were Downtown Vancouver (14.3%), Camas City (14.6%), Brush Prairie (12.7%), and La Center (12.7%). Perhaps not surprisingly, the highest average sale prices in specific areas were found in Camas City ($273,600) and Brush Prairie ($271,500).

2004 Outlook for Clark County

Homes are being snatched up in record numbers across Clark County, though the number of homes being sold is maintaining the status quo. RMLS data indicate that 2003 saw a whopping 1,249 more closed sales than the year previous, with only 23 more homes were put on the market in the same amount of time. 2002 had 10,591 new home listings, 2003 just bare edged that mark with 10,614. 2003 also saw a dramatic reduction in the average time a home in Clark County stayed on market. Last year in this area, homes spent an average of 67 days on the market compared to 79 days in 2002. Also significantly, the available number of homes as calculated by RMLS has diminished to 3.2 months. Should no more homes be put on the market, the available supply of homes would be sold in 3.2 months. If the traditional holiday season lull in home transactions is taken into account – and the subsequent rebound as the weather improves – this number could actually be much lower. All of this could mean higher prices, and a tighter market in Clark County throughout 2004.

Many experienced Realtors are predicting that the brisk market in Clark County will continue at least through the end of 2004. Although it is moving rapidly toward to seller’s market with rising home prices, the constants remain the same: schools, taxes, and affordability. There is no sign of it slowing down, and some even predict a busier year than last year’s record breaker.

Best interest rates in years continue:

It is almost universally accepted that the housing market in the Portland/Vancouver metro area, not to mention the national market, performed so well in 2003 due to exceptionally low interest rates on mortgage loans. According to the most recent data available from the Federal Housing Finance Board, the month of December 2003 saw the average interest rate on conventional 30-year, fixed-rate mortgage loans decrease to 6%. The average interest rate on conventional 15-year, fixed-rate loans decreased to 5.79%.

Conditions on interest rates remained extremely positive throughout 2003. Based on data from Freddie Mac, Interest rates on 30-year, fixed-rate mortgage loans reached their highest level on Sept. 4, 2003 at 6.44% -- as did 15-year loans, at 5.77%. Conversely, rates bottomed out around mid-June 2003, with an advantageously low rate of 5.21% and 4.60% for 30-year fixed and 15-year fixed respectively.

Breakdown by Area:

Beaverton

New listings: up 1.5%
Home Sales: up 10.4%
Avg. sale price: $200,300
Avg. apprreciation: 4.5%

Residential real estate in Beaverton was solid performer all year long. Though about the same number of homes were listed for sale as in 2002, many more were purchased. Beaverton real estate also remained attractive due to its affordability relative to the rest of market, as well as due to solid appreciation rates in home values. There were 3,012 homes sold in the Beaverton/Aloha area in 2003. That mark signifies a robust 10.4% increase over 2002’s total of 2,699, and an overall record for homes sold in a year for the area. Average sale prices in Beaverton grew to $200,300 last year, up from an average of $192,000 the year previous – though still shy of the $222,500 average sale price throughout the broader Portland metro.

Appreciation in home prices grew at a modest 4.5% during the year. Though more than a full percentage point behind the rest of the Portland metro area’s 5.8% rise in average home value, 4.5% represents an encouraging, stabilizing trend of moderate-to-good home appreciation rates after several years of fluctuation.

The success of developments such as The Round in Beaverton’s core contributed greatly to the success of the Beaverton real estate market. The condominium properties there have been moving well, thanks in large part to prolonged demand from unexpected sources across the market’s spectrum.

2004 Outlook for Beaverton

Last year saw 3,000 homes sold in a year for the first time on record. Cracking this barrier also represented the largest one-year leap in home sales in the past decade, truly a remarkable event. Even though new listings only increased by 1.7%, supply seems to have kept up with demand, keeping home prices very affordable relative to the rest of the market. The leveling off of appreciation rates indicates a balance might have been struck between new construction, existing home sales, and consumer demand – boding well for buyers, sellers, and homeowners in 2004.

Clackamas County:

New listings: down 0.7%
Home Sales: up 14.7%
Avg. sale price: $215,450
Avg. apprreciation: 6.3%

The Clackamas/Happy Valley area simply could not put enough homes up for sale in 2003. Home sales exploded, up almost 15% over 2002. With a final closed home sales count of 2,088, this incredible push allowed the Clackamas/Happy Valley area to record more than 2,000 homes sold in a year for the first time on record.

Following the trend throughout the area, homes put up for sale did not keep up with buyers’ demand. In fact, the number of homes listed for sale in Clackamas/Happy Valley (3,180) actually shrank in 2003 compared to the year before (3,203). With such a high demand, it is remarkable that home prices ‘only’ appreciated 6.3% in the area. Average home prices settled at $214,500 at the end of the year, a shade less than the average throughout the metro area.

2004 Outlook for Clackamas/HappyValley

There is no reason to expect anything other than the red-hot market to continue in Clackamas/Happy Valley this year. As long as mortgage rates stay at such low levels, the demand for homes, as well as the ability for people to buy them, will continue unabated. Even should the interest rates rise, it will bring the market closer to harmony between supply and demand. Either way, Clackamas/Happy Valley will be a spot worth keeping an eye on 2004.

Lake Oswego:

New listings: down 10.3%
Home Sales: up 7.8%
Avg. sale price: $345,151
Avg. apprreciation: 4.5%

Market demand was up significantly in Lake Oswego/West Linn last year as fewer homes were put on the market – which makes the fact that Lake Oswego/West Linn area shattered the record for home sales in 2003 that much more impressive. According to the Regional Multiple Listing Service, new listings were down 10.3% from a year ago (2,677 new listings vs. 2,987) but closed sales rocketed up 7.8% (1,834 closed sales vs. 1,691). 1,834 closed sales are the most ever seen in the area. Not surprisingly, homes sold at a much faster rate. In 2002, the average home in Lake Oswego spent an average of 82 days on the market. The last quarter of 2003 saw homes being bought very quickly. With an average time on market of only 68 days – a full two weeks less than the same period a year ago. Given the traditionally slow 4th quarter, when winter and the holidays typically cool the market, this figure is doubly impressive.

Traditionally, the Lake Oswego/West Linn residential housing market has been robust. Augmented with a large number of upper-tier properties, the area usually is near the top of the Portland metro area in terms of average home sale price. Last year, the total market volume of Lake Oswego/West Linn residential real estate was $1.275 billion , also the largest total on record. In 2003, the average sale price for a home in Lake Oswego/West Linn appreciated 4.4% to $345,151.

2004 Outlook for Lake Oswego

Largely due to the make-up of the Lake Oswego/West Linn properties, the nature of the residential real estate market is insular, and can be resistant to the fluctuations found in other areas. Because homes generally cost more in this area, the increased demand and reduced inventory is cushioned somewhat by the simple fact that not as many buyers can afford properties in this price range as in other areas – thus reducing the overall buyer pool. As such, a typical prediction would suggest moderate growth in home prices, steady appreciation in value, and healthy demand for the properties in this area.

Canby/Oregon City:

New listings: down 8.5%
Home Sales: up 7.1%
Avg. sale price: $217,300
Avg. apprreciation: 6.8%

According to the RMLS statistics for the Oregon City/Canby area; which includes Oregon City, Beavercreek, Canby, Molalla, and Mulino, market demand was up slightly in 2003. With and 8.5% decrease in new listings and a 7.1% increase in closed sales, the market got a little tighter throughout the area. Homes coming into the market were not being replaced as quickly as they were being sold, creating a slight increase in demand as well as a healthy 6.8% appreciation rate – outperforming the Portland market average by whole percentage point.

With listings being down last year, it was definitely a seller’s market. In Canby, homes under $200,000 were selling very quickly and new listings were taking a long time to come on the market. The most sought after property is still in the Canby School District and Hubbard has had a significant growth spurt but right now, there are only a handful of homes on the market there.

2004 Outlook for Oregon City/Canby

The banner year enjoyed by residential real estate across the Portland metro and the rest of the country did not skip the Oregon City/Canby area. Appreciation outperformed the market average, home sales broke a record, and mortgage rates remained low. So far, there has been little news to suggest 2004 would bring anything different to the residential real estate market than the year previous.