Housing inventory fell to 1.4 months and owners reduced prices for 35 percent of active listings; slightly-overpriced homes expected to reduce in price
by Daniel Pearson, editor | Oregon City Times | July 26, 2022 | Oregon City real estate news
Recent MLS listings show home buyers are experiencing less competition in the Oregon City real estate market as the local housing inventory fell to 1.4 months and 35 percent of active listings saw price reductions.
Stephanie Peck, owner of Oregon City-based PEX Realty Group, said the line of home buyers waiting to buy a house is shorter compared to the last two years but properties continue receiving multiple offers and there may be opportunities at times to purchase a home at slightly under market value.
“We’re still seeing multiple offers on some properties,” Peck said. “If it’s a great property or a rare property, something that is highly desirable and it’s priced affordably, and by that, I mean market value, Oregon City still has more buyers of those homes.”
Peck said homes that are even slightly overpriced are probably going to be seeing a price reduction, based on prices being reduced for 35 percent of recent listings, in the first two to three weeks of being on the market.
“Sellers are still looking at their neighbor’s home that sold three months ago for X amount of dollars and got this many offers and is this much above list price — people still have that expectation for their house and that’s just not reality anymore,” she said. “You can’t base your price on what your neighbor did three months ago.”
Median sales prices
Data on Redfin.com shows the June 2022 median sale price of all home types in the 97045 zip code was $625,000, an increase of 13.6 percent from June 2021. The average price of a townhome was $450,000, a 16.9 percent increase from the same period last year, and condo prices averaged $315,000, up 11.7 percent from June 2022.
Home buyers who are waiting for the market to crash are going to be disappointed. Opportunities exist where sellers are very motivated and they are going to be aggressively reducing their prices. That will create opportunities to get into something below market value. With the other sellers willing to wait it out a few weeks they’re still going to get the price they want just not as fast, Peck said.
The lowest the inventory of available homes sank during the last two years was .7 months in March 2022. In June, available inventory increased to 1.4 months, indicating a seller’s market.
“There are still lots of homes available for the pool of buyers out there, they’re just not getting bought up as fast,” Peck said. “Comparing now to 2020 is a little wonky. Even looking at January 2020, which is pre-Covid shutdown, we were at 2.2 months of inventory. That’s a pretty healthy market. When interest rates really started going down everyone caught onto buying and all of 2021 saw one month or less of inventory. This is historic. In 15 years I’ve never seen it like this.”
Pending sales outpace new listings
Rising interest rates are the cause of the Oregon City real estate market shift toward having more pending sales than new listings – the gap between new homes on the market and buyers that are buying them – and pending sales already are lower than they traditionally have been.
“Low interest rates are what caused the market frenzy of the last two years,” Peck said. “They were so low buyers were very motivated wanted to get into something and the affordability was there more than it ever was before prices started going up too high to be affordable.”
For example, two years ago someone may have paid a $1,951 principal and interest monthly mortgage payment for a $500,000 Oregon City home at a 2.8 percent interest rate. Now, the 5.5 percent rate pushes that payment to $2,697.
On top of rising interest rates, consumers have been hit hard by inflation. Home buyers now have to scrutinize spending on gasoline, groceries, and other necessities when factoring in higher monthly mortgage payments.
First-time buyers who don’t have home equity to roll over into a new house are going to spend about $3,000 per month, including taxes and insurance, on a $500,000 home and even more on homes listed at Oregon City real estate median sales price of $625,000, Peck said.
Many home buyers who want to purchase property in Oregon City are turning to Canby and Molalla and elsewhere but even some of those consumers are being priced out of the market when factoring in the cost of a daily commute, she said.
Affordability contributes to rental increases
Many people that were once home buyers are continuing to rent, creating an opportunity for investment in Oregon City and in the region that didn’t exist when prices were inflated.
“I’m seeing more frequently people who want to live in Oregon City but are having to purchase farther outside of the city,” she said. “I’m seeing that more price-sensitive buyer. I’m seeing a shift in general. A lot of people from Portland are moving to Oregon City. We have a Portland-ish vibe and an easy commute to a lot of places so that has put more demand on Oregon City. That’s also caused people here to be priced out and they are going a little farther out or those that don’t want a big-city feel that Oregon City is starting to become are going farther out.”