For three years in a row, Oregon has been the top destination state to which people are moving. And that enthusiasm is certainly showing up in Portland’s real estate market, as home prices rise and buyers compete for new condos and older homes in the city’s many walkable neighborhoods.
The key to gaining a real estate foothold in the Rose City is getting your finances ready before you begin shopping, and being aware of hidden costs. Doing so will allow you to narrow your focus on the properties that truly fit your needs and budget.
Prepping for Portland home buying success
In this hot market, Portland homes are selling at a record pace, with lower inventory and lots of demand pushing prices up. Take the median sale price, for example. It reached $310,000 in January 2016, up 11 percent from January 2015. While these rising home prices can create challenges for first-time home-buyers entering the market, the prices here still feel reasonable for transplants hailing from places like New York or Northern California.
This competitive atmosphere means that first-time homebuyers should have their finances and mortgage options lined up before they begin house shopping. Getting pre-approved for a mortgage instills confidence in home-sellers and can help to separate you from the pack. Homebuyers should also have a good sense for how much cash they can put down and where that money will come from. While a 20 percent down payment used to be standard, serious buyers in competitive markets like Portland should consider that to be a minimum.
The hidden costs of condos and older homes
Whether it’s a condo in the Pearl District or a charming craftsman on the east side, Portland neighborhoods are known for their livability. You can walk or ride your bike to world-class restaurants, hip food carts and independent coffee shops in many parts of town.
However, both the city’s newer condos and older homes can pose hidden costs for buyers. With condos, buyers should ask about fees or homeowners association dues (HOAs) connected with the condo. Depending on the building’s amenities, HOA fees can vary widely, and can often be hundreds of dollars per month. In addition, if you have a car, you’ll want to inquire about parking and whether a space or garage will cost extra.
Portland’s older neighborhoods are also popular with first-time buyers. Many of these homes were built several decades ago, which makes them charming but sometimes risky. Always make time for a thorough inspection process, and review the details carefully. This will give you a clearer picture of any required repairs and potentially costly problems.
Get creative, but ultimately keep your cool
With the fierce competition for homes in Portland, it’s not uncommon for buyers to get creative in order to seal the deal. I remember a story of one couple who owned a pizza shop. They offered free pizza to the sellers of the home they wanted to help sweeten the pot. While that’s an unusual case, there are other incentives first-time home buyers can offer. For example, if you’re flexible to move more quickly than a buyer with another house to sell, consider enticing sellers with a shorter escrow period.
For first-time homebuyers, shopping in this kind of market can feel both exciting and a bit daunting. It’s crucial to keep the big picture in mind. Remember, you’re making a long-term, strategic decision. You’ll need to assess each home individually to make sure it’s a good fit for your needs and financial situation. Avoid rushing too quickly into a decision. Maintaining the big-picture perspective can ultimately help you find and buy the Portland home that’s perfect for you.
The information and opinions in this article are presented as-is and may not be suitable for all readers. Please obtain appropriate advice for your particular situation.
© First Republic Bank 2016