Current trends across price levels

It’s always interesting to see how buyer demand varies throughout price ranges. Variations in demand among price ranges can impact average price, at least in the short run. Average and median price are typical ways to measure trends in the market value of real estate, but here are some factors that affect average and median price people may not often think of.

Unit mix – As the upper end of the market falls in to or out of favor compared to more modestly priced homes, average price is affected.

Preference for remodeling over moving – During the covid era many people chose to remodel rather than move, and some both remodeled and moved. This influenced home values both by improving the quality of the housing stock and constraining inventory.

Interest rates – Rates directly affect affordability, and due to market psychology it’s often the direction of rates that affects buyer behavior more than the actual rate itself.

Prior refinance frenzy – Home owners refinancing to fixed rates under 3% created a massive cohort who are reluctant to sell. Imagine a world where rates had only gone down to 4.5%, what would the market dynamics be like now?

Fear and greed – Extreme market conditions cause certain buyers to wait for the next “crash” while others are concerned they’ll miss out on today’s comparatively reasonable prices. One group may remember the financial crisis era while the other may be more mindful of the years of underbuilding that followed which contributes to our low supply of housing.

Here is what’s actually happening in the real estate market, at least in the Portland metro area:

Recently, pending sales have increased compared to the prior year, and fairly substantially. In all price ranges week one of this year compared to week one of last year is up 22%.

“High end” homes: For years we used to think the “high end” began at $1 million, because that number is big and round. To update that threshold I took all the sales for the last four or five months and asked excel where the 95th percentile was, and it was $1,150,000.

The final couple months of 2023 was almost the same as 2022 until December, when the market started showing significant improvement.

Finally, here’s a chart showing the market trends for homes over $2 million. These homes are are pricier than over 99% of homes on the market so market dynamics are often a little different than more modestly priced homes.

As you can see the last part of 2023 was actually not quite as good as 2022 with the exception ?of a few of the weeks. If the strength in the lower price ranges continues that activity should work it’s way into the upper ranges as the season progresses.

Current buyer trends are available for specific suburbs, zip codes, and neighborhoods in the price range you're concerned about. These trends show current buyers who are actively looking, not just pending sales. Reach out for the specific trend in the area of interest to you.