Covid and Buyers to Portland’s Rescue?

With Portland’s downtown businesses in freefall and homelessness on the rise there and in the close-in neighborhoods residential real estate nonetheless remains a seller’s market and this year March is coming in like a lion:

March typically launches the prime-time real estate market, which spans about eight months. What’s ahead? The average price for a Portland area home rose to $542,000, according to the latest housing report, which benefits sellers and keeps pressure on buyers to act fast, make concessions and select from a small amount of homes for sale.

“The biggest story continues to be the lack of inventory, which has been historically low for nine months,” says Suzanne Page, a broker with John L. Scott Southwest Portland…

The limited amount of residential properties available “continues to backlog our buyers, creating this crazy, pent-up demand,” says Page. “And I don’t see it slowing down. Overall, the influx to the Portland metro real estate market is greater than the exodus out.”

Prices are escalating, according to the latest Regional Multiple Listing Service (RMLS) report.

I’ve read that among antifa’s goals is the destruction of property values. Antifa’s detractors can’t be blamed for sharing a desire for the local market here to crater, reflecting the degradation of life here and, maybe somehow, prompting local government and a placid public to opposition. But, despite businesses fleeing downtown and commercial real estate there moribund, buyers continue to pour into Portland’s suburban neighborhoods. Coronavirus lockdowns and the increase in working from home are sparing politicians and their implicit allies in real estate that reckoning by spurring a shift to the suburbs.

The pandemic has redefined how many Americans work, forced more of us to find refuge in our homes, and called into question the necessity of those dreaded commutes to a downtown office.

We are seeing these issues play out in real estate markets. Single-family home prices are on the rise — increasing 7 percent during the past calendar year. Meanwhile, commercial real estate demand has remained relatively flat — perhaps a surprise given the massive shift to working from home. 

But underneath these aggregate trends lie a substantial reallocation of demand away from city centers toward city suburbs for the largest metro areas in the U.S. 

This creates what we call the “donut effect”: rising prices in the suburbs and slumping prices in major city centers being hollowed out by a fear of crowds and the growth of working from home.

Portland’s downtown is being hollowed out already in the wake of rioting. The effect of our new anarchy is combining with Covid restrictions, of questionable utility, to spur a new flight to the suburbs–years of progressive Portland’s success in creating a livable downtown is quickly being spent, at the same time any political reckoning for that is deferred by the influx of homebuyers and better than expected tax revenues in the wake of all the rioting.

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