Home prices escalating at astonishing rate
The shrinking supply of homes throughout the Portland area has led to selling them faster and for more money than ever thought possible. The rise in home prices has been a boon to sellers and buyers if they act fast to get the homes, especially the moderately-priced ones, they want.
A recent shocker in Newberg was a home off South Chehalem Street that within a day of listing received an offer: the home is a mere 439 square feet with an asking price of $193,000. That equates to nearly $440 per square foot, while the county's average cost is $206.
Is it possible the buyer wants to use it as a vacation rental?
"The vacation rentals by owner (VRBO) is strong in our area right now," Randy McCreith, a broker for Bella Casa Real Estate Group, said. "We do have a lot of people who need to spend less money as we get pushout from Portland. Sherwood is expensive and they come out to Newberg. I think that a lot of property investors are coming out and buying the properties for rentals."
The previous high for home sales in Newberg was in 2006 and 2007, before the market crash and the financial crisis in 2008. Today's average home price is $350,000, an increase from 2006-2007, and represents the sector of the market that has shot up in Newberg.
According to Yamhill County Housing Profile, in 2015 the median price of a home was $221,886, in May 2017 the average price was $303,000.
"What is driving our market in Yamhill County is that Portland started recovery in 2012 and Yamhill County did not," McCreith said. "We didn't stop bleeding here until 2014, but 2015 was the first year that I could say it was a good market and if it feels normal again. … The people are now pushing out farther … to get a good value and they're buying particularly our lower-priced homes and that's driving those prices up."
The value of homes has gone up 8.6 percent over the past year and it is predicted that the prices will increase another 0.3 percent.
"A rule of thumb that I say about Newberg is the starting prices are around $350,000 and $300,000 in McMinnville," McCreith said. "There are some houses under $350,000 in Newberg, but they are all these strange houses that are free standing apartments or free standing condos on tiny lots.
"Our high-end properties are not doing that well in our area. Right now, Newberg is struggling at the high end of around $700,000 and $750,000."
As of last week there were 13 listings for homes under $300,000 and most are condos, attached homes, townhouses and manufactured homes, McCreith said.
However, the end may be in sight for the housing boom. By this time in 2017, about 180 homes had sold, whereas this year that figure is down to 143 sold.
"There could be a downturn, but not because of the economy this time," McCreith said. "There comes a point, and I'm starting to see a little of that, that the buyers just say, 'I'm just not going to do this and I don't want to end up in a disaster when there is a downturn and all of a sudden I'm losing value.' There is getting to be a little more in negotiations and little bit more in demands on buyers' parts for repair addendums. It's not what the hype is, 'Oh put it on the market and in two days there are five offers.' A lot of that still is happening in some places, but it is not the norm in our area. It will get to the point that the buyers will say, 'I'm going to stay where I am; we're not going to move because I don't want to pay those high prices.' That could be the thing that gets the prices down again."