January 8, 2024

New statistics released today reveal a mere 4% drop in pending home sales nationally during the first four weeks of December, marking the smallest decline since March 2022. Coupled with the recent Fed announcement of potential rate drops next year, analysts anticipate a market turnaround in 2024. While this is promising news for the housing market, understanding its implications for our local Portland real estate market is crucial. Let's delve into the details.

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In a world saturated with news sources, it's evident that media outlets strive to attract readers with attention-grabbing stories. However, national news may not necessarily align with the realities of our local communities. For instance, our Florida clients reported an increase in housing prices in 2022, contrary to the national average decline. Naturally, the real estate market experiences an ebb and flow, typically seeing a significant drop from Thanksgiving until mid-January. During this period, we observe increased activities such as rising mortgage applications, new listings, pending sales, and lockbox openings, as evidenced by SentriLock data.

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While charts can offer insights into market activity, they may not provide a comprehensive understanding. Another crucial factor is "inventory levels," representing the number of homes on the market. Low inventory, or a seller's market, occurs when homes available are less than buyer demand, while high inventory, or a buyer's market, results from an excess of homes. Historically, imbalances between buyer demand and available homes are common. However, the 2023 market is notable for a reduction in both active buyers and sellers. This phenomenon can be attributed to interest rates. Sellers who secured historically low rates during refinancing or home purchases opted to delay selling due to the potential impact on their buying power in the current market. Buyers faced their own challenges. When interest rates were low, they could afford more expensive homes. Now, the increased rates have either priced them out of the market or raised concerns about buying amidst potential market uncertainties, reminiscent of the 2008 housing market during The Great Recession.

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With a recent drop in interest rates, 2024 holds promise as an intriguing year, potentially marking a pivotal point in the Portland real estate market. How it unfolds is, of course, the "$64,000 Question." Historical data reveals consistent home value appreciation in Portland - roughly doubling every 10 years. According to this 2022 article, Portland home prices have increased an astonishing 206% since 2000! Armed with this insight, we assert that it's always a great time to buy a home, despite expected marketplace fluctuations. Rate drops usually ignite buyer excitement, often driving an upward trend in home prices.

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If you seek more information or would like to know more, feel free to reach out. We're always delighted to discuss market trends and data with you!