2025 Portland Oregon Housing Forecast
When we step into a new year, real estate economists like to make predictions about what lies ahead—especially around mortgage rates and home prices. This year, though, the crystal ball is foggier than ever! The big players—think Fannie Mae, Freddie Mac, Zillow, and Redfin—have vastly different takes on what’s next. Some predict lower mortgage rates, while others see rates rising into the later part of 2025 before (finally) receding. Home prices? Well, forecasts range from a 4% drop to a nearly 5% increase nationwide. Such wide disagreement is rare!
So, what does all this uncertainty mean for us here in Portland? Let’s break it down, starting with where our market stands today.
Portland’s Current Market Snapshot (November 2024)
- Price Reductions: About 50% of listings have had price reductions since September. While this sounds like a lot, it’s a typical seasonal pattern for our area. Homes often see price adjustments in the fall and winter—it’s not a sign of trouble but just how things go.
- Home Prices: Average home prices are up compared to 2023 but still below their 2022 peak. If you’re curious about how we measure this, price-per-square-foot is a great metric, currently sitting at $315.
- Time on Market: Homes in November took about 60 days to sell, which is slightly longer than in recent years but not a drastic change. For perspective, it’s just one day shorter than the current national average.
Despite the seasonal slowdown, the Portland market remains steady. Winter has always been a quieter season for real estate here, and this year is no exception.
What Does This Mean for Buyers and Sellers?
For Buyers: Good news! Mortgage rates have dipped slightly compared to this time last year. Per Freddie Mac, in early December 2023, the average 30-year fixed rate was 7.03%, but now it’s sitting at 6.81%. Plus, inventory is at a three-year high, giving you plenty of options to explore.
For Sellers: You’ve got reasons to feel optimistic too. Sellers in the Portland metro are seeing a median price increase of nearly $40,000 compared to this time last year. If you’re thinking about listing, the numbers are in your favor.
The Big Picture: Why So Much Uncertainty?
There are two key factors behind the mixed forecasts for 2025:
- Hope vs. Reality: The real estate world has been holding its breath for mortgage rates to drop significantly, but the timeline keeps shifting. Inflation is easing, but global economic policies and shifting market dynamics keep delaying rate decreases. Buyers and sellers are watching and waiting—but hope alone isn’t a strategy!
- The “Buildup Effect”: Over the past two years, the number of home sales has dropped dramatically. In July 2018, a typical summer month, over 3,000 homes went pending in the Portland area. This past July? Just 2,191. Nationwide, 2024 saw the lowest level of home sales since 1995. But this doesn’t mean people don’t want to move. Many are simply waiting for the right moment, creating pent-up demand that could trigger a surge in activity when conditions improve.
- “King Tides: The desire for homeownership and to relocate to a new location or a different type of house does not go away. It only builds as it gets delayed. This buildup is real and waiting. Economists just can seem to agree upon when the tide will come back in. When it does come, it’s likely to be one of those King Tides that we all see KATU report from in Depot Bay, showing the water spray across Highway 101. Hopefully, I’m not reporting at this time next about how the housing market was more akin to the Exploding Whale in Florence, OR from 1970.
National Forecasts for 2025
Here’s what some top names are predicting for home prices next year:
- Wells Fargo: +4.9%
- Goldman Sachs: +4.4%
- Fannie Mae: +3.6%
- Zillow: +2.6%
- National Association of Realtors: +2.2%
- Freddie Mac: +0.6%
- Mortgage Bankers Association: +0.1%
- Huringa: - 4%
As you can see, the experts are all over the map!
My Positive Outlook for Portland in 2025
While the start of 2025 may look similar to now, I believe the market will pick up momentum when mortgage rates hit (and hold at) 6% flat for at least two months. That’s when buyers and sellers will regain confidence, and the pent-up demand we’ve been talking about will spring into action. This surge could push prices up quickly—a win for sellers, though it may pose challenges for buyers.
As one of my mentors once told me: “Never underestimate the power of the American consumer.” When the tide turns, it could be big—and in Portland, we’re well-positioned to ride the wave.
Here’s to a year of opportunities and navigating the real estate journey together! If you have questions or need guidance, I’m always here to help.