PORTLAND HOUSING 2Q18: New Home Sales Decline as Prices Outpace Majority of Market Demand
- 2Q18 sales of new detached single family homes in the region fell 4% QoQ, with all of the declines from Washington County and Clackamas; Clark and Multnomah sales were up 21% and 51% QoQ
- Median prices in Washington and Clackamas were up 6% YoY, and those counties have felt the majority of the slowing sales for the past year.
- In 2Q18, total homes under construction in the Portland region increased 73% from 2Q17; Metrostudy expects MOS to climb as high as 24 months by the end of the year based on the number of projects under construction
Metrostudy’s 2Q18 survey of the Portland housing market shows that sales of new detached single-family homes fell another 4% QoQ, with all declines coming from Washington County and Clackamas, which were down 27% and 20% from 1Q18, respectively. Clark County was up 21% and Multnomah was up 51% from 1Q18.
“The decline is due to rising interest rates and rising home costs,” said Todd Britsch, Regional Director of Metrostudy’s Portland office. “We have outpriced the majority of the market. In 2Q18, 76.5% of the markets closings fell below $550,000 and we currently have 30% of our inventory priced over that $550,000 number. Clark County sales were up because the homes there are much more affordable. The multi-family market year-to-date numbers compared to 2017 are improving with sales up 13.09%.”
The median list price in all counties was down compared to 1Q18 ranging from 1% decline in Clackamas to 9% decline in Multnomah, with the exception of Clark County, which ticked upwards 2%. However, compared to 2Q17, both Washington and Clackamas were up 6% and those counties have felt the majority of the slowing sales for the past year.
The total number of homes under construction in the Portland region at the end of 2Q18 was 387, a 73% increase from 2Q17. Unsold months of spec inventory climbed in every county compared the last quarter while sales continue to fall at a modest pace. The region also added a net 608 lots to the market, causing the months of supply of vacant lots to climb from 14 months to 18 months. Metrostudy expects months of supply to climb as high as 24 months by the end of the year based on the number of projects under construction.
“The market has been in its correction process for two years as sales moved downward at an average of 6% per quarter,” said Britsch. “The economy is good, we have good job growth but Portland’s cost to construct a home is simply too expensive and incomes are not keeping pace. In 2016, the median home price was $382,000 and you had to make roughly $85,075 to afford that home. That same home has now increased by 19.11% to $455,000, which means your income had to increase by 30% to $135,500 in order to afford the home with rising interest rates. Pricing should be correcting but with the cost of land, labor and material that may not be possible.”
For information contact
Todd Britsch – firstname.lastname@example.org
About Metrostudy: Metrostudy is the leading provider of primary and secondary market information to the housing and related industries nationwide. Metrostudy provides research, data, analytics and consulting services to help builders, developers, lenders, suppliers, retailers, utilities and others make investment and business decisions every day. For more information, visit www.metrostudy.com
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