The following analysis of the Oregon and Southwest Washington real estate market is provided by Matthew Gardner, chief economist at Windermere Real Estate. We hope this information can help you make more informed real estate decisions. For more information about the housing market in your area, please contact your Windermere real estate agent.

Regional economic overview

After a significant slowdown in the pace of job recovery in Oregon this summer, employment growth picked up until rising COVID infections began to hit the country, leading to fewer workforces. Of the more than 285,000 Oregon jobs lost at the start of the pandemic, 204,700 have returned. Oregon is still nearly 81,000 positions lower. The southwest Washington area also saw a similar slowdown, but it’s a much smaller market and therefore less affected. In fact, this area has now recovered all but 600 of the more than 22,000 jobs that were lost. Oregon’s unemployment rate has fallen below 5%, but remains 1.5% higher than it was before the pandemic hit. Notably, the unemployment rate in southwest Washington currently stands at 4.7%, only marginally above its pre-pandemic low of 4.3%.

Oregon and Southwest Washington Home Sales

❱ In the third quarter of the year there were 21,119 sales, down 1.2% from a year ago but 7.4% higher than in the second quarter of this year.

❱ Sales were higher in all but five provinces than in the second quarter, but the sales decline was very small in all these markets.

❱ Sales activity was mixed across the region, with sales increasing in 9 counties and declining in 17. Benton, Linn and Cowlitz counties saw significant increases. The biggest drop in sales was in Tillamook County, but small markets often show significant swings, so that’s not an issue for me at the moment.

❱ While demand has declined, low inventory levels have slowed the market somewhat. I am hopeful that the market will see an increase in the number of offers, but I do not expect that there will be enough to meet demand until next spring.

oregon and southwest washington home prices

A map showing the percentage changes in the real estate market in several counties in Oregon and Southwest Washington during the third quarter of 2021.

❱ House price growth slowed very modestly from the pace of the second quarter, but was still 18.2% higher than in the third quarter of 2020. Prices were also 2.5% higher than in the second quarter from this year.

❱ Four counties – Crook, Hood River, Multnomah and Tillamook – saw house prices fall, but the change was minimal and no cause for concern.

❱ All counties in this report had higher house prices than a year ago, with very significant increases in Tillamook and Skamania counties. All but two provinces saw double-digit valuations.

❱ Home prices have risen very high and should start to cool down at some point. While I predict mortgage rates to rise in 2022, it won’t be enough to significantly impact prices. However, declining home affordability in many markets will slow valuations, which should come as a relief to homebuyers.

A bar chart showing the annual change in home sales prices for homes in several Oregon and Southwestern Washington counties during the third quarter of 2021.

Days at the market

❱ The average number of home sales days in the region is down 29 days from the third quarter of 2020. It took 5 days less to sell a home compared to the second quarter of this year.

❱ The average time to sell a home in the third quarter of 2021 was 31 days.

❱ All counties saw how long it took to sell a home compared to a year ago, but half of the counties in this report saw market time increase compared to the second quarter of 2021.

❱ Homes again sold fastest in Washington County, where it took an average of just 11 days to sell. Another 17 counties saw the average market time drop to less than a month.

A bar chart showing the average days on the market for homes in several counties of Oregon and Southwest Washington in the third quarter of 2021.

conclusions

A speedometer chart indicating a seller's market in Oregon and Southwest Washington in the third quarter of 2021.

This speedometer displays the state of the real estate market in the region using housing stock, price increases, home sales, interest rates and larger economic factors.

The region’s housing market is sending mixed messages, with the pace of sales, price growth and number of days on the market starting to slow in some areas. Overall, the data is still very positive, but buyers are still hampered by low inventory levels and many are simply unwilling to pay what is being asked. This is evident given the change in list prices, which have softened in many markets.

While the housing market remains adamant in favor of sellers, I think we are slowly peaking and possibly moving towards a more balanced market. However, I don’t see that happening until next year, and it’s not guaranteed. Home sellers still have the upper hand, but given all the factors detailed in this report, I’ll leave the needle in the same spot as last quarter.

About Matthew Gardner

Matthew Gardner - Chief Economist for Windermere Real Estate

As chief economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market at both the local and national levels. Matthew has over 30 years of professional experience in both the US and UK

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees of the Washington Center for Real Estate Research at the University of Washington; and serves on the Advisory Board at the Runstad Center for Real Estate Studies at the University of Washington, where he also teaches real estate economics.

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