Real Estate 101

Portland’s Home Prices Have Skyrocketed, But Investment Opportunities Remain

Despite Increasing Home Prices, Real Estate Investors Have Numerous Opportunities in Portland, OR

The Portland, Oregon, metro area is on pace to become one of the most expensive markets in the country when it comes to finding housing.

The real estate market in Portland was competitive for years prior to 2020 and 2021, but the past year marked a new milestone for the city: the lowest inventory reported in 30 years. Compared to November 2019, the average sales price was up 12.7% in November 2020 and agents reported an unusually high number of bidding wars and cash offers.

From January 2020 to January 2021, Portland’s median home price increased 13% from $406,000 to $460,000. In January 2020, homes were selling for an average of 98.82% of the listing price. In January 2021, that number jumped to 103.9%, according to Regional Multiple Listing Service.

Portland is experiencing a tight housing inventory like most markets across the country – just to even greater extremes. Portland’s housing shortage has created a highly competitive market to buy – for those who can afford to do so. As home prices in Portland continue to increase, current renters and would-be buyers find themselves in a precarious position. They can afford to pay the increasing rental rates, but they can’t afford to buy a home.

No wonder nearly 48% of Portland area households are renters – which is higher than the national average of 36%. Portland’s price-to-rent ratio is 28.98% - putting Portland 11th out of 50 large metros. It is the smallest of the 50 large metros, and it has the least affordability to own a home. Multifamily building permits have decreased dramatically at -30%, and even single-family permits have decreased by -1%.

Portland’s tight inventory and increasing home prices have caused real estate investors to try new approaches in adding to their portfolios. Finding a traditional fix-and-flip or single-family rental investment is difficult, but it can prove very lucrative in a metro like Portland where single-family rentals are becoming scarcer as time goes by.

So some investors are looking to the suburbs, both in Oregon and across the border in Washington.

One of the biggest real estate trends of 2020 was the migration from major metropolitan areas to smaller cities and the suburbs, and Portland was no exception. Portland has seen a huge influx of buyers from cities like Los Angeles and San Francisco since the onset of the pandemic. As a result, the real estate market slowed when the pandemic shutdowns first hit.

When Portland’s real estate market froze, investors began to wonder if a housing market crash was around the corner. Many investors believed Portland’s market was in a housing bubble that was about to burst at the hands of COVID.

But a few factors that kept Portland’s housing market from crashing. Portland’s low inventory was key. When buyer demand started to rebound in May, the inventory continued to remain low and home prices increased slightly. With demand staying stable, a crash is unlikely with such tight inventory.

Portland real estate investors should be excited about the remainder of 2021. The housing market has changed, and it has created buying opportunities for investors to capitalize on – as long as they know where to look.

Neighborhoods close to basic amenities, public services, schools, and shopping malls will likely be easier to occupy. Portland’s downtown area, Goose Hollow, University Park, Pearl District, and St. Johns are some of most popular neighborhoods for investors to consider.

While inventory might be harder to find, real estate investors with strong strategies can still profit. So it’s more important than ever to have a real estate team that helps you close properties quickly and certainly, and run your construction or rehab projects smoothly. That’s what Lima One Capital provides investors in Portland and around the country. Get started today and let Lima One supercharge your investment success.

RELATED: Lima One Capital is proud to partner with St. Jude on the Dream Home it is building in 2021 in the Portland suburb of Vancouver, Washington. Learn more about this fundraising project for this worthy cause here.