2021 Portland Real Estate Market Forecast

The 2021 Portland real estate market is full of uncertainty, but we’ve experienced enough of the post COVID19 housing market to have some confidence in creating a solid forecast. We will follow up with a second housing market projection in Jan. 2021, but this should be a good guide to any home buyer or seller in the Portland real estate market today. First we will start with a collection of real estate industry predictions:

2021 National Real Estate Market Predictions

-1.5% Housing Price Drop, Zillow

-6.6% Housing Price Drop, CoreLogic

2021 Portland Real Estate Market Forecasts

-2% Housing Price Drop, Zillow

+1% Housing Price Increase – My Prediction

Will my Home Increase or Decrease in Value in 2021?

Honestly that is what every homeowner cares about. In Portland some types of homes will most likely decrease in value in 2021 while others continue to appreciate. So I’m going to break down our housing types into five groups to help answer this question for you. Four groups will represent regulard detached home pricing and one group will be for condos.

Luxury Home Forecast 2021

This forecast is for properties averaging $1,199,000 in the greater Portland metro area. They equal the top 25% of housing stock according to excellent statistics provided by Fidelity National Title. These properties on average are 4,102 sq. ft. with four bedrooms and three bathrooms. On average right now they take 127 days to sell. The price range would be from $850,000 to unlimited.

Prices in this segment haven’t moved much since 2017, but there has been slight and continual appreciation at a rate around 2%. I expect that to continue into 2021 due to the economic factors I will explain below.

1.5% Housing Price Increase Predicted

Top 50% of Housing Stock Forecast 2021

This forecast is for properties averaging $749,900 in our metro. They equal the top 50 % to 75% of housing stock. This home on average is 2,927 sq. ft. with four bedrooms and three bathrooms. The average time to sell a home in this segment is 83 days. The price range would be from $600,000 to $850,000.

Prices in this segment also haven’t moved much since 2017, appreciating at a rate of 1%. the last few years.

0.5% Housing Price Increase

Bottom 50% of Housing Stock Forecast 2021

This forecast is for properties averaging $550,000 in our metro. They would equal the bottom 25% to 50% of housing stock. This home on average is 2,249 sq. ft. with three bedrooms and two bathrooms. The average time to sell is 58 days. The price range would be from $450,000 to $600,000.

Prices increased 3% in this segment in the last year and I expect will continue to appreciate at a higher rate for a multitude of factors I will explain below.

2% Housing Price Increase

Bottom 25% of Housing Stock Forecast 2021

This forecast is for properties averaging $375,000 in our metro. They would equal the bottom 25% of housing stock. This home on average is 1,389 sq. ft. with two bedrooms and one bathroom. The average time to sell is 66 days (with fixers and distressed properties included). The price range would be from $450,000 and down to zero.

This market segment has also increased significantly since 2017, at about a 3% rate a year.

2.5% Housing Price Increase

Condo Portland Real Estate Market

The condo market in Portland has not fared as well recently due to the high number of new construction apartment buildings throughout the metro. Since 2017 an average condo priced in the low 200K mark has appreciated about 2% a year. An average priced condo in the mid-300K mark has depreciated about 1% a year. An average priced condo in the upper 400K range has depreciated about 1% a year. Luxury condos have remained flat.

Overall -2% Condo Price Decrease in 2021

5 Reasons why the Portland Real Estate Market will Not Crash in 2021, but will keep on at a slower pace.

I recently wrote a longer article on this, but will summarize here. There are five major economic factors to consider.

1. Portland Unemployment has Skyrocketed (but not among potential homeowners)
   • In early 2020 Portland had an amazing 3% unemployment rate, and in April it shot up to 14%. But among wage earners making $16 or so an hour, it went up 36%. Among medium and high wage segments it went from 3% to 5 or 6% depending on the industry type. Portland had 5-6% unemployment in 2014, 2015. Those years in our real estate market were good, not 2016 until today good, but still saw positive slow growth.
2. New Construction Rates will be down in 2021.
   • Despite the new Residential Infill Project, new construction has been down in Portland since 2017 and looks to continue to drop into 2021. Labor costs are up (construction jobs are the only industry jobs still at less than 1% unemployment rates today), material costs are up, permit costs are up, deconstruction costs are up, all at rates much higher than local housing price increases. This lack of new housing options will keep the market from dropping.
3. Portland Population Growth might not exist.
   • Portland population growth has been slowing since 2017 and was at a crawl in 2019 – 2020. There is a chance we will see a flat population for the first time in Portland in decades in 2021. This will keep the housing market from increasing significantly.
4. COVID19 has provided the market with intense home buyer motivation.
   • We’ve been living in the post COVID19 world long enough to get a baseline on buyer motivation and any real state agent in the industry right now will tell you it is extremely high. Schools are online, kids are at home and parents are working from home. There are a lot of people stuck in their current living situation realizing it worked fine for them pre-COVID, but not post – not with everyone at home all the time.
5. Mortgage rates are near unbelievable.
   • I don’t need to say much here, but I can tell you rates under 3% are commonly available and making homes more affordable than the prices themselves might indicate.

Applying Economic and Living Factors to Housing Segments in the Forecast

Luxury homes will increase in price due to buyer demand for more space and home amenities while they (and their families) are stuck at home. Buyer motivation to own in this category has increased significantly. While increased unemployment will hurt, buyer demand will keep this segment afloat.

The top 50-75% range of homes will also slightly increase due to move up home buyer demand.

The bottom 50% will increase due to first time homebuyer demand and the COVID19 desire to vacate crowded living spaces like apartment complexes.

Condos will continue their slow pricing slide. They are dense living environments, getting no bonus from COVID19 home buyer motivation.

Wildcards to the 2021 Housing Forecast

Everything we need for a slow but steady Portland housing market is in place. We have a lack of inventory and high buyer demand coupled with little to no population growth and increased unemployment. We have factors that would push the market to red hot and others a deep freeze. In other words, market forces that should push us to middle. Wildcards would be on the international or national, not local, scale. Our local real estate market statistics are steady and strong and have been so since 2012.