The Real Reason Home Prices Are Increasing In Portland Oregon

Dated: 12/01/2017

Views: 179

The Real Reason Home Prices are Increasing

The Real Reason Home Prices are Increasing | MyKCM

There are many unsubstantiated theories as to why home values are continuing to increase. From those who are worried that lending standards are again becoming too lenient (data shows this is untrue), to those who are concerned that prices are again approaching boom peaks because of “irrational exuberance” (this is also untrue as prices are not at peak levels when they are adjusted for inflation), there seems to be no shortage of opinion.

However, the increase in prices is easily explained by the theory of supply & demand. Whenever there is a limited supply of an item that is in high demand, prices increase.

It is that simple. In real estate, it takes a six-month supply of existing salable inventory to maintain pricing stability. In most housing markets, anything less than six months will cause home values to appreciate and anything more than seven months will cause prices to depreciate (see chart 1).

The Real Reason Home Prices are Increasing | MyKCM

According to the Existing Home Sales Report from the National Association of Realtors (NAR), the monthly inventory of homes has been below six months for the last four years (see chart 2).

The Real Reason Home Prices are Increasing | MyKCM

Bottom Line

If buyer demand outpaces the current supply of existing homes for sale, prices will continue to appreciate. Nothing nefarious is taking place. It is simply the theory of supply & demand working as it should.

Latest Blog Posts

Portland Oregon Residential Real Estate Review June 2018

June Residential Highlights The Portland metro area saw some cooler activity this June, but closed sales saw a gain over last month. At 2,946, closed sales slipped 7.6% below the 3,187 closings

Read More

Rents Increase 3 Percent Nationaly

Renters are paying an average of $40 more per month than a year ago as June rents brought an upsurge of 2.9 percent in national average rents,according to RENTCafe.com, based on Yardi Matrix data

Read More

The Reason To List Your House For Sale Now

The #1 Reason to List Your House for Sale NOW!If you are debating whether or not to list your house for sale this year, here is the #1 reason not to wait!Buyer Demand Continues to Outpace the Supply

Read More

Median Rent Prices Rise In The Portland Oregon Metropolitan Region

Portland Oregon Experiences 3% Yearly Increase in Median RentPortland Rents continue to rise. This latest chart shows the median rent in the Portland region. Two and three bedrooms rose 3.1% and 3%

Read More