Jul 12, 2023 - Real Estate

Why Portland's real estate inventory is so tight

Monthly mortgage payment in Portland metro area
Data: Redfin; Chart: Alice Feng/Axios Visuals

Nearly all Oregon mortgage holders have a rate below 6%, locking homeowners in "golden handcuffs" and leaving buyers with fewer homes to choose from, per Redfin data shared with Axios.

By the numbers: The average 30-year fixed mortgage rate in Oregon has risen to about 7%, but the majority of those mortgage-holders have a rate below 4%.

  • With fewer homeowners wanting to give up their interest rate, the number of homes sold in the Portland area in May was down 28% from last year.
  • The average monthly mortgage payment for those who bought a home in 2021 for $505,918 with a 3% rate is $2,436, compared to $3,276 for those with a 6.4% rate.

What they're saying: "We often have tight inventories here but this feels even tighter than normal," Rachel Freed, owner and principal broker of Portland-based Urban Nest Realty, tells Axios.

  • "If you have an interest rate below 4% and your option is to stay where you are or move to a new place with a 7% interest rate, then many people are likely to stay put."

Context: Homeowners might have a great rate now, but likely can't move without spending a lot more cash.

Zoom out: It's not just a local issue. Nine in 10 U.S. homeowners secured mortgage rates below 6% as of late 2022, per the new Redfin report. Meanwhile, national average mortgage rates have swung between 6% and 7% in recent months.

Yes, but: Buyers are also exploring adjustable-rate mortgages or buydowns in hopes of a lower monthly payment, explains Redfin chief economist Daryl Fairweather.

Reality check: Lower rates could loosen up some supply, but not enough to meet demand.

  • New construction isn't keeping up. Fairweather predicts it'll take the U.S. a decade to fix its housing shortage.
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