Have you been waiting for the right time to invest in the Portland housing market? Has the coronavirus got you thinking “Is now a good time to invest in Portland real estate?”
Well, you’re not alone. The Portland housing market is generally known as an expensive yet profitable place for buying rental property. So it’s natural that today, many real estate investors are wondering if the coronavirus has led to a drop in housing prices in the city. Or whether the pandemic has created other Portland housing market trends that would make 2020 the time to move on a rental property for sale.
Mashvisor’s real estate market analysis reveals that now is a good time to buy a house in Portland, Oregon for investment. But it may not be for the reasons you expect. Let’s look at this analysis and find out how the real estate market in Portland is doing in 2020.
Related: Is Now a Good Time to Invest in Real Estate?
The Impact of the Coronavirus on the Portland Housing Market in 2020
Real estate was deemed essential during the coronavirus outbreak earlier this year as stay at home orders were enforced in Oregon. Although real estate agents, buyers, and sellers were allowed to continue transactions in the Portland housing market 2020, inventory and buyer activity dropped due to COVID-19. This was a general trend that we saw across most of the US housing market during March and April of this year.
A Portland Housing Market Crash in 2020?
With this apparent cooling of the Portland real estate market along with the effects of the coronavirus on the economy, talks of a local housing market crash began. Many believed the market was already in a housing bubble due to the high house prices in Portland and that COVID-19 would surely cause this bubble to burst. The Portland housing market forecast 2020 was looking bleak.
While it’s true that the Portland housing market “froze” in early spring, a few key elements were able to keep the market from crashing. One among them is very low inventory. The Oregon real estate market as a whole suffers from one of the largest housing shortages in the nation. So when buyer demand for Portland homes for sale began to slowly rebound in late May, the inventory continued to fall short. When the demand for housing is higher than the housing supply, a crash is unlikely. In fact, reports show that home prices in the Portland housing market increased slightly in May, during the coronavirus.
Furthermore, historically low mortgage rates continue to drive up demand and certain types of homes for sale (those that have more space, a home office, a large yard, etc.) are actually seeing bidding wars during this time.
Portland Housing Market in Recovery
The bottom line is the Portland housing market is slowly recovering in the face of the coronavirus. Buyers are coming back into the market right now and some experts believe that by the end of July 2020, the real estate market could be in full recovery.
Will housing prices go down in Portland as a result of the coronavirus? So far, it seems unlikely. Realtor.com reports that the median list price in the Portland-Vancouver-Hillsboro metro area is actually up 4% year over year for June 2020.
At the same time, coronavirus cases are back on the rise in Portland. So while things are looking up for the Portland real estate market right now, it’s important to keep an eye on things (especially the local economy) as COVID-19 is still a developing situation. However, as long as real estate remains essential and Portland real estate agents, buyers, and sellers continue to adjust to virtual transactions and social distancing, the Portland real estate market is likely to hold up during this health and economic crisis.
So, Why Is It a Good Time to Invest in Portland Real Estate?
It’s true that house prices in the Portland housing market probably won’t drop significantly due to COVID-19. If that was your sole reason for considering a Portland real estate investment right now, you might have to look for bargains elsewhere. However, there are plenty of other reasons why it’s a good time to invest in the Portland real estate market.
As we’ve seen, the market is recovering and low mortgage rates will help you pay less overall for a Portland investment property. Beyond that, there are plenty of foundations in place that make buying property in Portland a wise decision.
History Shows Us That Portland Real Estate Appreciates
A drop in property values is one of the major fears people have about real estate right now. However, properties in the Portland real estate market have enjoyed appreciation over the years. Data from NeighborhoodScout reveals that Portland real estate investors and homeowners have seen their property values rise by around 158% on average since Q1 2000. That is an average annual appreciation rate of 4.78%.
The fact that Portland house prices are still rising during COVID-19 combined with historical trends leads us to believe that a Portland income property will appreciate in value.
Keep in mind that now is the time to implement a buy and hold real estate investment strategy, due to the general instability the coronavirus has caused. That way, you are sure to enjoy real estate appreciation in the Portland housing market. Even if property values end up falling in the immediate future, they are likely to rise again.
The Portland Real Estate Market Is a Neutral Market
Although some Portland homes for sale are hot right now and are receiving multiple offers, the market is mostly a neutral one, according to Zillow. Redfin gives the Portland housing market a Compete Score of 58 (somewhat competitive) where homes sell for about 1% above the listing price.
The Renter Population Is High
A Portland rental property will likely attract a lot of renters as the renter population is high in the market. Around 48% of residents live in a Portland rental property.
The high prices that continue to rise are likely to keep homeownership rates down. The price to rent ratio, according to Mashvisor’s data, is 24. This means that the average resident finds it more affordable to rent a property than to buy one.
High rental demand means higher occupancy rates and good cash flow.
There Are Affordable Neighborhoods in Portland
According to Mashvisor’s data, the median property price in Portland is:
- Median Property Price: $601,974
- Price per Square Foot: $324
However, there are more affordable neighborhoods in the market where a rental property generates a good rate of return. Here are the most affordable ones in Mashvisor’s database:
#1. Sumner
Median Property Price: $353,100
- Price per Square Foot: $263
- Price to Rent Ratio: 15
- Traditional Rental Income: $1,992
- Traditional Cash on Cash Return: 2.6%
#2. Russell
Median Property Price: $394,186
- Price per Square Foot: $207
- Price to Rent Ratio: 18
- Traditional Rental Income: $1,857
- Traditional Cash on Cash Return: 1.2%
If you’re looking for data on Airbnb Portland properties, check out Mashvisor now. We have omitted the Airbnb data here as non-owner occupied properties cannot operate legally in the Portland real estate market.
And Affordable Portland Investment Properties for Sale, Too
If the median prices of those neighborhoods in Portland are still too high for you, don’t worry. With the right real estate investment tools, you can find affordable homes for sale in Portland. Here’s what we found when we used Mashvisor’s Rental Property Finder, with a budget set to $150k:
Sign up for Mashvisor now to access the Rental Property Finder and find affordable properties for sale in Portland.
Related: 2 New Ways to Find Cheap Investment Property for Sale
A Portland Rental Property Is Profitable
Generally, a Portland rental property is profitable and will generate good cash on cash return. However, single family homes for sale in Portland are where it’s at. They are, on average, the most profitable type of Portland investment property in terms of cash on cash return:
- Median Property Price: $632,338
- Price per Square Foot: $279
- Price to Rent Ratio: 23
- Traditional Rental Income: $2,303
- Traditional Cash on Cash Return: 1.1%
Here are some of the top-performing single family homes for sale right now in the Portland real estate market:
Related: 4 Tools for Finding Single Family Homes for Sale
It’s a Good Time to Invest in These Portland Neighborhoods
If you’ve decided to make a move in the Portland housing market, do so in a neighborhood where rental properties generate good returns. These are the best Portland neighborhoods, based on cash on cash return (excluding the two listed above):
The 5 Best Neighborhoods in Portland for Investing in Rental Properties
#1. Ashcreek
- Median Property Price: $570,918
- Price per Square Foot: $263
- Price to Rent Ratio: 20
- Traditional Rental Income: $2,424
- Traditional Cash on Cash Return: 1.7%
#2. Far Southwest
- Median Property Price: $499,160
- Price per Square Foot: $244
- Price to Rent Ratio: 19
- Traditional Rental Income: $2,159
- Traditional Cash on Cash Return: 1.4%
#3. South Tabor
- Median Property Price: $616,250
- Price per Square Foot: $253
- Price to Rent Ratio: 27
- Traditional Rental Income: $1,913
- Traditional Cash on Cash Return: 1.2%
#4. Eliot
- Median Property Price: $908,000
- Price per Square Foot: $320
- Price to Rent Ratio: 35
- Traditional Rental Income: $2,167
- Traditional Cash on Cash Return: 1.1%
#5. Lents
- Median Property Price: $427,287
- Price per Square Foot: $303
- Price to Rent Ratio: 21
- Traditional Rental Income: $1,678
- Traditional Cash on Cash Return: 1.1%
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