Residential Real Estate
A record number of homes for sale have lowered their price. Here’s how many sellers have slashed prices in Portland
With aggressive pricing and high interest rates keeping many buyers sidelined, a record number of home listings have had price drops in recent weeks. OLEKSANDRA KLESTOVA VIA GETTY IMAGES
By Joanne Drilling and Brandon Sawyer – Portland Business Journal
High interest rates are weighing heavily on homebuyers, but they also are prompting a record number of sellers to drop their prices. That's according to an analysis of pricing data from Redfin Corp., which found 20.8% of active listings nationally had a price drop in October.
In the Portland metro area, 42.6% of active listings had a price drop in October, the seventh-highest rate among the nation's 100 largest metro areas. Portland was surpassed in home markdowns by Cincinnati with a rate of 55.2%, as well as Indianapolis, Denver, Boise, Idaho, Grand Rapids, Mich., and Tampa, Fla. At the other end of the spectrum, only 13.6% of homes for sale in Newark, N.J., had price drops last month. The median price for Portland metro-area homes was $535,000 in October, a 1.7% decline from September and a 0.9% dip from the same month in 2022. It ranked 19th for the highest median price among the metro areas. The chart below shows how Portland's median home price rose steadily over the last 10 years, fell sharply in 2022 after mortgage rates spiked, then rebounded midway through 2023 before trending down again.
Portland metro area's median home price peaked midway through 2022 as mortgage began their ascent $600K $550K $500K $450K $400K $350K $300K $250K $200K $150K $100K $50K Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23 Jul-23 Oct-23
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Source: Redfin
Nationally, the weekly average for price drops was nearly 7% for the four weeks ended Oct. 29. That's the highest point on record, according to Redfin. Interest rates aren't the only factor in the drops, but they are compounding the affordability equation at time when many sellers are pricing aggressively. “Some sellers are pricing too high because they have FOMO after their neighbor’s house sold well over asking price two years ago,” said Seattle Redfin Premier agent Patrick Beringer. “While low inventory is driving some competition, and relatively affordable homes in popular neighborhoods are still selling fast, they’re getting two or three offers as opposed to 20 offers at the height of the market."
With interest rates hovering between 7.5% and 8%, buyers also simply don't have the budget they once did. Even with a higher percentage of sellers cutting their prices, median sales prices remain up 3% compared to a year ago, according to Redfin. It's a dynamic that's shaping the industry in multiple ways. Homebuilders are pulling out all the stops to get deals across the finish line, often by providing incentives. One of the leading incentives? Mortgage-rate buydowns —
although some say those buydowns could pose a significant challenge for homebuilders if rates decline quickly. Still, as Ashley Fahey of The National Observer: Real Estate notes, the National Association of Home Builders said higher interest rates are affecting builders' ability to move forward with their projects, as the number of single-family homes under construction in September was 674,000, about a 15% decline from a year ago. The affordability crisis also is sparking demand in the build-to-rent sector — particularly among young buyers who have been priced out of the market. According to the Mortgage Bankers Association, applications on average are down 22% nationally. “Mortgage rates are higher than they’ve been in the past roughly 30 years,” Katherine Bosken, North Carolina Commissioner of Banks, recently told Lauren Ohnesorge of the Triangle Business Journal. “I would hate to think they were going to go as high as they got in the early '80s, and I don’t envy millennials trying to buy homes at this point.”
The national housing picture Cincinnati (55.2%), Indianapolis (51.3%) and Denver (46.5%) had the highest percentage of listed homes with a price drop in October.
Additionally, pending home sales declined in all but three of the nation's 100 largest metro areas: Austin, Texas; Tampa, Florida; and Las Vegas.
Top 10 metros with the largest home price drops Here's the cities with the steepest declines, as well as annual and monthly comparisons Metro area
Price drops In October 2023
Median sale price
Month-over-month change in median sales price
Year-over-year change in median sales price
Cincinnati
55.2%
$275,000
1.7%
10.0%
Indianapolis
51.3%
$290,000
-3.3%
3.6%
Denver
46.5%
$575,000
-0.9%
0.9%
Boise City, Idaho
43.6%
$484,700
2.5%
-1.2%
Grand Rapids, Mich.
43.3%
$320,000
0.0%
9.7%
Tampa, Fla.
42.8%
$370,000
-2.6%
-1.4%
Portland, Ore.
42.6%
$535,000
-1.7%
-0.9%
San Antonio
41.9%
$310,000
-1.6%
-3.1%
Salt Lake City
41.5%
$512,000
1.4%
-0.6%
Tacoma, Wash.
41.5%
$530,000
-1.9%
1.6%
Source: Redfin
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Despite the increase in price drops in October, the national median sales price is still up 3.4% compared to 2022 — although some formerly high-flying Sunbelt markets have seen declines. That includes West Palm Beach, Florida (10.6% decline), Austin (6% decline) and Fort Worth, Texas (3% decline). Conversely, cities with double-digit increases in median home sale prices include Newark, New Jersey; San Jose, California; and Columbus, Ohio. Redfin said growth in sale prices may slow in the coming months as it starts to reflect sales that went under contract as mortgage rates hit 8% in October.