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MARKET SNAPSHOT: PORTLAND FACES SCARCITY CRISIS

Monday, July 24, 2023

Portland, Oregon, remains attractive for home builders looking to capitalize on the region’s dearth of housing supply.

Short of housing, Portland has a market for all types, according to Irvine, California-based New Home Co., which recently expanded into the metro with its first Pacific Northwest division.

The builder is starting with new-home projects in Tigard (Axiom at River Terrace) and Beaverton (The Vineyard at Cooper Mountain). Single-family homes will start in the high $500,000s and townhomes in the low $400,000s.

New Home Co. says it has a significant supply of land that it’s taking through entitlements, mostly in Washington County.

Market Image

Strengths

An apartment shortage looms due to underbuilding since 2008 and a decrease in multifamily permitting during the pandemic. Dice ranks Portland’s tech industry fourth in the U.S. for average pay and pay growth, with an average salary of $127,734 and a 15.5% increase from 2021-22.

Weaknesses

Redfin says 100% of homes for sale in Portland would be cheaper to rent than buy, putting the metro on par with all the other expensive West Coast markets. There is a 54% premium to buy versus rent in Portland, more than double the national premium of 25%.

Supply

Quarterly housing starts increased 53.3% over a year ago, while the number of available vacant developed lots sits at 6,312, up 16.9% over the same quarter last year. In terms of supply/demand balance, the market area is 2.03% undersupplied.

Sales

New-home sales in the Portland-Vancouver-Hillsboro metropolitan area decreased 29.9% year over year to an annualized rate of 3,456 units in June. Existing-home closings for the 12-month period ending in June posted a year-over-year decline of 40.3% to an annualized rate of 29,875 units.

Prices

The average list price for a new detached home in the region increased 4.5% from 2022 to $672,254 in June, while the average list price for a new attached home increased 1.3% over the same period to $488,258. Homes priced between $450,000 and $550,000 experienced the most closing activity over the past year. The new-home affordability ratio for a detached home reached 21.9% in June.

Economy

Total nonfarm employment in the metropolitan statistical area increased 3.4% from the same period last year to 1,263,400 payrolls in May, with 3,000 more jobs compared with the previous month. The local unemployment rate decreased to 3.7% in May compared with 4.1% in the previous month. May’s jobless rate is higher than it was this time last year when it stood at 3.5%. Zonda forecasts the region’s unemployment rate will finish the year at 4.1%.

Community

The current population for the metropolitan area is approximately 2,529,240 people and is projected to increase by 0.9% this year. There are approximately 1,000,730 households in the region, which is up 1.3% year over year. Forecasts show that current household formation is expected to increase by an annual growth rate of 1.9% for 2028. Incomes increased by 6.1% from the previous year to $92,776.

By Zonda Data Intelligence 

https://www.builderonline.com/data-analysis/market-snapshot-portland-faces-scarcity-crisis_o

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