March 2023 Market Update

Dated: March 7 2023

Views: 12

Welcome to March!

At the end of February, the inventory in months stood at 2.3, meaning it would take 2.3 months for all the homes on the market to be sold at the current rate of sales. This is a significant reduction from January, with a 39.6% decrease in inventory. As of now, only 160 properties are on the market in West Linn and Lake Oswego, one of which is a legal duplex at $575k--I'm looking at you, investors--this is an excellent entry point in a great community. Of the single-family properties, the lowest priced is this cute little construction site for under $177k, and the highest real home is this stunning Mediterranean estate ready to go for a measly $15 million. Only 19 homes came on the market since last Thursday, with prices ranging from $360k for this condo to $4.45M for this stunning NW contemporary in Lake Oswego. 8 of the 19 homes are priced over $1M. Needless to say, but I'm saying it anyway, 19 homes in 4 days is not very many, even for Lake O and West Linn, which is typically a slower market than the rest of the greater Portland Metro.

Low inventory plus high demand and reasonably low-interest rates make it an excellent time to sell a luxury property in West Linn and Lake Oswego. However, as a buyer, you are still facing stiff competition and higher prices due to limited inventory, and cash is king now as much as it ever was... unless you want to take advantage of leverage. More on that below. It's crucial to have an experienced real estate advisor on your side to help you navigate the current market conditions and find the right luxury property that fits your needs and budget.

Let's talk about leverage. While current rates are in the 6-7% range, it's important to note that they are still historically low. In the 1980s, for example, interest rates peaked at over 18%, which made it much more expensive for buyers to finance a home. On the other hand, in a balanced market, interest rates tend to be in the 4-5% range--this means that there are roughly equal numbers of buyers and sellers, and the market is not skewed in favor of one group or the other. In a balanced market, homes tend to sell within a reasonable amount of time, and prices tend to remain stable. In the current market in West Linn and Lake Oswego, we are seeing the effects of low inventory and high demand, hampered by slightly elevated interest rates. This has resulted in a clamping effect, as buyers are losing buying power due to fickle loan figures, even while eager sellers are still trying to get a realistic value out of their property. As of today, we're seeing a low average of 6.5% for a fifteen-year fixed, and a high of 7.629% for a 10/6 adjustable, which is an arm AND a leg.

For sellers, this can be a great time to list your property and receive multiple offers, potentially driving up the final sale price, but keep in mind that buyers are very sensitive to the inflated pricing of a year ago and will ignore anything priced according to the winter 2022 stratosphere, thus limiting the true potential of the seller's market. That said, we've returned to a normal growth trajectory year over year, which is good for everyone. Now, while the 6s and 7s of today seem high, they're still a better cost for credit than say "credit cards" for example which typically land anywhere from 15 to 30%, and you can put some cash in a high-interest savings account like a CD or a managed investment fund with yields around 10% and wind up living in your new home equivalent to interest-free, thanks to the FED's efforts to curb inflation by raising interest rates. This is leverage. If you do it correctly and listen to the advice of your trusted advisors, now is an excellent time to buy, and you can get a great deal since sellers can't raise prices according to seller's market de rigeuer.

For buyers, it can be a pain to find the right home at the right price right now with such low inventory and slightly more expensive loans, but careful offer structuring and negotiation will save your bacon. Having a knowledgeable and creative real estate advisor on your side can make all the difference. In a nutshell, while current interest rates are still historically low, they are higher than they were this time last year. Additionally, the current market in West Linn and Lake Oswego leans in favor of sellers, with low inventory and high demand driving up prices, but high mortgage premiums are keeping buyers from making bold moves to get the home of their dreams, and forcing a note of caution across the board--not really a bad thing, if you ask me, even if it does make everything take longer. Buyers may face more competition and higher prices, but with the right agent and strategy, they can still find their dream luxury/investment property. Understanding the historical context and current market dynamics as well as what buyers and sellers are looking for from the big picture of the transaction--intangibles like rate buydowns and rent back--is key to making informed decisions in luxury real estate.

In summary, the current real estate market in West Linn and Lake Oswego is characterized by low inventory, high demand, and practically low-interest rates that will require us all to adjust to a new and sane normal. While it might seem like a seller's market, buyers can still find their dream luxury property with the right guidance and strategy.

If you're ready to get to work toward living your lifestyle by design, or have any questions for me about the market or otherwise, please reach out. I look forward to being of service!


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Adam Davis

Whether the adventures you're after are outdoors or culinary, tech, trade, or retirement, the Pacific Northwest has it all. I live here because I love it here, and aim to provide the heightened level ....

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