Will Housing Market Continue to Rise in Portland
15 Min Read | Oct 14, 2022
If you're thinking about buying or selling a house right now, you're not alone. The housing market has seen a lot of unusual trends in the past couple years, and it's no surprise things have been pretty weird! And it makes sense that you'd want the latest update on what'll happen in the market before you decide to buy or sell. The truth is, housing market predictions are about as reliable as weather forecasts. The real estate pros make their best forecasts based on data, but no one can know what's going to happen with 100% accuracy.
Still, even if you don't know for sure, you can check out what the experts are saying and make some pretty good guesses. Just remember, a housing market forecast can only give you an idea of what to expect if you buy or sell a house in the coming months. You never want to let a market prediction control your housing decisions . . . only your personal situation and finances should do that!
With that said, here's my real estate market forecast.
Housing Market Prices and Sales
Okay, first things first: 2022 is not 2021. The crazy way houses were getting multiple offers and selling for thousands of dollars over asking price within hours of going on the market is pretty much over. But the U.S. real estate market is still strong. It's just not crazy anymore. And really, crazy just adds an extra level of stress to buying or selling a house.
Find expert agents to help you buy your home.
So, three cheers for no more craziness!
What's the Average House Price in 2022?
The average home price in the U.S. was $701,989 in September 2022 (including existing homes, new builds, single-family homes, condos and townhomes).1 But most experts report on the median, which saw an annual increase of 13.9% to $427,000 in September 2022.2
Remember, median means half of all homes sold for more than that and half sold for less. It's usually better to look at median home price than the average. That's because a small group of super expensive houses can throw off the average and make regular homes seem more expensive than they really are. (Just something to keep in mind as you watch the average house price in 2022 fluctuate.)
Real Estate Market in the Third Quarter of 2022
The main thing to keep in mind about this market is that home prices are determined by supply and demand. And since there's still strong buyer demand and a shortage of homes for sale, prices aren't going to plummet. They're softening a bit when it comes to growth—but they'll still be higher than they were at the start of this year.
Housing Recession: What Is It and Are We in One?
A housing market recession means the total number of home sales has been shrinking for at least six months in a row. So are we in some kind of housing recession? Well, sort of, but a housing recession isn't something to really worry about since home prices aren't in a recession. It's true that August 2022 marked seven consecutive months of decreases for the total number of home sales.3 And Fannie Mae predicts home sales to drop 16.2% by the end of 2022.4 But as we covered earlier, home price growth continues to increase compared to the previous year.
And since 2021 was a record year for sales, what we're really seeing now is home sales volume returning to normal, pre-pandemic levels. In other words, this is more of a housing market correction than a recession.
The market would only be something to worry about if the declining home sales were an indicator of too much supply (houses for sale) and not enough buyer demand—which could cause home values to plummet and hurt the overall economy. But that's not the case here.
Will House Prices Go Down?
It's unlikely that home prices will go down in 2022 and beyond. Freddie Mac predicts home prices will grow at a slower rate of 4% in 2023, but they're not going to drop in the coming years.5
Remember, the only factors that could cause home prices to go down are related to supply and demand. If the number of homes for sale started booming, then buyers wouldn't have to compete as hard as before for such a small selection of homes. But since we've had a supply shortage for a long time now, more homes for sale would probably just help to even out the market.
On the other hand, there are ways buyer demand could sink. For example, the Federal Reserve could continue to increase federal interest rates. While the Fed doesn't directly set mortgage rates, federal rate hikes usually cause mortgage lenders to raise their rates too. Some buyers may back out of the market to avoid those higher rates. But again, the pandemic had so many buyers putting off their plans to buy a home. So buyer demand is still greater than housing supply—which is why prices will continue to go up, but at a slower pace.
Now, if you're thinking of selling, don't stress. The average house price in 2022 is still higher than in past years, so odds are you'll still make a pretty penny. But if you're waiting to sell because you think your home will double in value soon, don't count on it. You'll want to decide whether to sell your house based on the reality of your situation—not what you hope the market will do.
On the flip side, if you're looking to buy, the cooling price-growth rate is good for you . . . but the high interest rates, not so much. You'll want to make sure you're truly ready to buy a home before you dive into the market this year. (Or any year, actually. It's always good to be prepared!)
Like I mentioned earlier, it's hard to predict how home prices will change over time. So, whatever you do, keep saving for a big down payment if you want to buy a home with confidence. (I want your home to be a blessing, not a curse.)
Housing Market 2023
As 2022 starts to wind down, a lot of people are trying to forecast how the housing market will turn out in 2023. Some news headlines make it sound like the housing market downturn will be worse in the coming years. But experts at the National Association of REALTORS® and Freddie Mac predict the number of home sales will either experience no increase or slow to 5.4 million, and home prices will soften to a more normal growth rate of 2–4% in 2023.6,7
Remember, the news often hypes things up just to get your attention. Ignore the headlines and look at the data. For example, you might see a news headline that says housing market conditions will worsen in 2023. But then you find out what they really mean is home prices will grow at a slower rate. The word worsen makes it sound scary (and clickable). But the truth is, slower growth isn't a sign of crashing.
Interest Rates
Let's not forget how interest rates affect the overall cost of your home! In 2021, interest rates were at an all-time low—averaging 2.3% for a 15-year fixed-rate mortgage and 3% for a 30-year fixed-rate mortgage.8,9
A big part of the equation is that the Federal Reserve has raised its benchmark interest rate several times to fight high inflation. Remember, the Fed doesn't set mortgage rates, but its actions affect interest rates for all borrowers. So, higher Fed rates coupled with inflation have pushed mortgage rates to about 6% for a 15-year fixed-rate mortgage and 7% for a 30-year fixed-rate mortgage by the last week of September 2022.10 (And the Fed is planning more rate hikes for the rest of this year. Oof.)
Interest rates fluctuate daily, but overall, they're a lot higher than they were in 2021. This stinks because it means new buyers entering the market will end up paying thousands more dollars in interest on their house over time. Higher interest rates also drop your purchasing power—meaning some houses will be priced completely out of your budget.
Housing Inventory
When it comes to housing inventory later this year, it looks like the number of houses on the market will still be low. Existing home inventory (not including brand-new home builds) dropped a little to 1.28 million at the end of August 2022, which is about the same as August 2021. To really cool down the market, there'd need to be twice as many homes for sale.11
And while home builders are confident they'll keep doing plenty of business in the rest of 2022, that doesn't mean buying a newly built house will be easy. Rising lumber prices, supply shortages and even government tariffs are making it crazy hard for home builders to build enough houses to keep up with demand, so inventory is low across the board.12
(But if you're thinking about selling your home, now's a great time because you'll be one of the few sellers in your market.)
Will Housing Demand From Buyers Remain Strong?
Buyer demand will stay pretty strong for the rest of 2022. In August 2022, home sellers received roughly three offers a month on their home, which is almost the same number sellers received per month before the pandemic.13,14
Homes sold in August spent a median of only 16 days on the market, and 81% of homes were on the market for less than a month. About 32% of homes sold above list price.15,16
So, even though higher interest rates and house prices have lowered demand, homes are still moving quickly. This is a great sign for sellers.
Buyer demand is also high because there are more families needing homes. Compared to 2006, there are 18% more adults in the prime home-buying age range (25–34 years old).17
Is It a Seller's Market Right Now?
A seller's market is when demand for homes is higher than the supply of homes. And that's still the case right now. If you're planning to sell your house, you can expect to sell it fairly quickly for close to asking price—as long as your asking price is realistic for the current market. (It's easy to value your home based on memories and how much you loved living there, but a good agent will help you price it fairly.)
When Will It Be a Buyer's Market?
In a buyer's market, there are more homes for sale than buyers. And since home supply is still low, it doesn't look like there'll be a buyer's market anytime soon.
The good news is, the market isn't as hot as it was even six months ago. If you're looking to buy, you'll have a few more options—and maybe less competition. It might still take longer to save a down payment or find your dream home, but the frenzy is slowing down.
Why Are Houses Selling So Fast?
Homes are still selling fast because there are more buyers than homes for sale.
There's a good chance homes will continue getting snatched up fast for the rest of the year. In 2020, most homes stayed on the market for 22 days—and now most homes are selling after 16 days.18,19
This is great news for sellers who are itching to sell quickly. But buyers, stay focused—you don't want to drag your feet when you find a home that fits your budget and your family. It's likely other buyers are interested, and it could sell if you wait too long to commit. That's why you've got to know exactly what to look for in a home and what you can afford before you jump in the game. Every market will be a little different depending on where you live, but it's best to be prepared.
When Will the Housing Market Crash Again?
Based on the data, it's unlikely the housing market will crash in the next few years because the current market is so different from the housing market crisis that caused the Great Recession of 2007–09.
Lending rules are stricter now, so experts don't expect a bunch of foreclosures. Plus, housing supply is still super low and probably won't catch up for a few years—so there's little to no danger of home prices dropping like a rock.
Will There Be a Lot of Foreclosures in 2022?
The nation saw a jump in foreclosure activity toward the end of 2021 and the first part of 2022, but they weren't new foreclosures. These foreclosures were delayed because of a government moratorium on foreclosures during the pandemic.
So, while some predicted a huge wave of foreclosures after the ban was lifted, that hasn't been the case. By the second half of 2022, there were only about half as many foreclosures compared to the same time in 2019. And prior to the 2008 housing market crash and the Great Recession (specifically the time period between the first quarter of 2006 and the third quarter of 2007), the average number of foreclosures was 68% higher per quarter than it was in the second quarter of 2022.20
Here's what all this foreclosure stuff means for homeowners and buyers:
- Homeowners: Since the market isn't going to get flooded with foreclosures, you can rest easy knowing your home isn't going to tank in value because of a sudden increase in home inventory.
- Home buyers: If you're waiting to find a great deal on a foreclosure, don't hold your breath. This market is nothing like the Great Recession. And keep in mind, buying a foreclosed home could come with its own set of potential issues. So, make sure you do your homework on the house and know what you're getting yourself into before you buy.
Current Housing Market Key Takeaways for Buyers and Sellers
The rest of 2022 could be a great time to buy a house—if you're ready. It could also be a horrible time to buy if you're not. But you can't let what's happening in the housing market decide this for you.
What really matters when buying a house are your personal finances and season of life. You're ready to buy a house if (and only if) you can check off these boxes:
- You're debt-free.
- You have an emergency fund of 3–6 months of expenses.
- Your monthly house payment will be 25% or less of your monthly take-home pay on a 15-year fixed-rate mortgage.
- You have a down payment. A 20% down payment is ideal because you'll avoid paying private mortgage insurance (PMI). But 5–10% is okay too if you're a first-time home buyer. Just be prepared to pay PMI. And steer clear of FHA and VA loans—you'll pay much more in interest and fees with them.
- You can pay the closing costs up front without stealing from your down payment.
If you don't meet these qualifications, it doesn't matter if the market is in your favor. Buying a home would end up being a curse instead of a blessing. Take your time to get in a better financial position so you can buy a house the right way.
Is Now a Good Time to Buy a House?
Here's the thing. I've mentioned the market shouldn't determine your decision to buy a house. If you're prepared to buy a home, then it's a good time, even if inventory is limited. If you're not prepared, it's not a good time, even if there's plenty of inventory.
Because of the number of buyers for existing homes and rising material costs for new homes, options might be slim. If you're prepared to buy a house, you may have to give up some of your wants to get a house that has everything you need.
Should I Sell My House Now or Wait?
Sellers can feel confident about selling their homes in 2022. If that's you, you might want to put your house on the market sooner rather than later—while inventory is still low. (But again, only do that if you're truly ready to sell your house. Don't let the market be the deciding factor!)
When you decide to sell, keep in mind that there aren't quite as many buyers in 2022 as there were in 2021, but there are still lots of people wanting a home.
If you work with an experienced agent, you'll be able to capitalize on home prices, navigate multiple offers, and find the right buyer. With an expert by your side, it'll be even easier to sell your house at a great price this year.
How to Buy or Sell With Confidence in Any Housing Market
The housing market isn't known for being easy to predict. That's why it pays to have a professional in your corner who's earned the RamseyTrusted shield.
Whether you're buying or selling, you need an agent who knows how to navigate a changing real estate market. And you can find them through our Endorsed Local Providers (ELP) program. The agents we recommend are top-notch real estate experts who can help you reach your housing goals—no matter what the market is doing.
Find a real estate agent you can trust!
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About the author
Rachel Cruze
Source: https://www.ramseysolutions.com/real-estate/housing-market-forecast
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