2024 Portland, OR Metro Housing Market Year in Review + 2025 Forecast
The Year-End 2024 report for the Portland Metro Housing Market is out, and there are some interesting tidbits that might help guide the compass as we head deeper into 2025.
Before diving in, I want to address one of the biggest questions I’ve been getting lately is about the proposed Trump tariffs and their potential impact on mortgage rates.
What to Watch: Is There “Snow” in the Forecast?
The Federal Open Market Committee (FOMC) will hold its first meeting under the Trump presidency on January 29th. Some economists that I follow and respect predict an announcement stating there won’t be any near-term Federal Funds rate reductions, which could be an effort to counter the short-term effects of the tariffs President Trump has implemented or plans to implement through Executive Order.
I did a bit of digging myself to see when tariffs were last as significant as those being proposed. You’d have to go back to the mid-1970s, when tariffs were a similarly large percentage of GDP (thanks, Wikipedia!). During that period, mortgage rates hovered around 7.5% to 8.5% for several years.
Now, I’m not suggesting rates will go that high, but there might be some acid reflux after the January FOMC meeting. Here’s why: I see a potential replay of what happened after last year’s January meeting. The stock and bond markets had priced in six rate cuts for 2024. When Jerome Powell announced that inflation was not yet under control and the expectation dropped to three cuts (ultimately, only two happened), mortgage rates rose immediately by about 0.375%. New information to the market is what ultimately impacts mortgage rates, as today’s rates are ALWAYS based on tomorrow’s market predictions.
Fast forward to now, and we’re in a similar spot. Based on the FOMC’s latest dot plot map (I’ve shared that in previous posts), the market is pricing in three rate cuts for 2025. If Powell announces no rate cuts are coming, we may see average 30-year fixed mortgage rates climb to the 7.375% to 7.5% range as early as the first week in February.
Remember, this is just a forecast. As Mark Nelson says on his KPTV weather forecast when snow is in the long-range outlook, we’re still in the “pattern recognition” phase.
Setting the Stage for 2025
The 2024 Portland Metro Housing Market ended with nearly 800 more active listings than at the close of 2023. This increase in inventory during the typically slow winter months contributed to a 1.4% drop in average home prices in December 2024 compared to December 2023. However, this trend has been consistent over the past three years post-COVID, with prices bouncing back each spring, seemingly tied to how many minutes of sunshine hits our face as the daylight hours increase.
From January through April, we’ll likely see homes selling below their listing prices, mirroring patterns from 2023 and 2024. Line graphs suggest we’re set in 2025 for a repeat of those years.
The Portland housing market is signaling that you currently have more negotiation power than at any time in the past decade. Come spring, as more buyers enter the market, this leverage will likely wane. With homes spending more time on the market than they have at any time this century, now might be the perfect time to strike a deal with select antsy sellers.
Attention Sellers:
Despite what you just read, its not necessarily bad news for you. While you might need to make concessions, if you’re planning to buy after selling, the deal you give your buyer is likely the deal you’ll get on your next home. If you’re selling without plans to buy, ensure your carrying costs make sense, and consider waiting until spring or later to list your home if you don’t wish to concede in contract negotiations.
For January 2025, homes will likely spend an average of 70+ days on the market. In February, that number could rise to 80+ days before time-on-market begins to decrease. Patience will be key. If your home is priced fairly, the data suggests you’ll eventually secure a buyer.
The Bigger Picture
Even with seasonal fluctuations, the median price of a home in the Portland Metro area grew by 2.1% in 2024. The median price at year-end was $543,000, meaning buyers paid $12,000 more for the same home compared to 2023. Even if mortgage rates rise a bit in the short term, we can expect a similar price increase through 2025.
If tariffs start the grumbling of a recession, we’ll see mortgage rates drop as we head into the end of 2025. More on that as we get closer to a clearer post-tariff forecast.
As we head into the new year, keep an eye on my market trends and make informed decisions. Here’s to a successful 2025 in real estate!
* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.