In February, we remained at one month of inventory, which is a historic low. According to the National Association of Realtors, one month is a dramatic seller’s market. Back in 2007 and 2008, we hit records with upwards of 15 months of inventory at one point, so there’s a marked difference between today’s market and where we’ve been in the past.
What’s really interesting is that we have less inventory today, yet there’s an abundance of buyers eager to purchase homes. Why is that? Well, even though interest rates are still fairly low, they have been on the rise over the past couple of weeks.
So what does that mean if you’re a buyer? It means that if interest rates go up by a half percent, it reduces the purchase price you can afford by nearly 5%. To illustrate the point, buying a $400,000 home at 3% would give you a monthly payment of around $1,800. If the interest rate goes up 0.5%, then that same house would have to be purchased at $380,000 if you wanted to keep the same $1,800 monthly payment.
Luckily, homes are very affordable right now. In February of 2020, the median home price here in the Portland metro area was $407,500, whereas today it’s $470,000—that’s a 15.3% increase year over year.
Being a homeowner right now is a massive wealth-building opportunity, but time is of the essence; interest rates cannot remain as low as they have been. And if you’ve considered selling your home, today could be an amazing time for you to take advantage of the high buyer demand in the market.
If you have any questions about buying or selling a home, don’t hesitate to reach out to me. I’d love to hear from you.