There’s an inventory shortage in our market, and there are two reasons why.
As a reminder, inventory means the number of available homes on the market. Inventory has been low the past few years, but it’s been especially low this year, causing some people to think we’re in for a recession.
I beg to differ, though, because the first reason for this inventory shortage is low interest rates. They’ve continued to stay low, and are giving buyers more bang for their buck. I always tell people that if interest rates ever rise, that’s when you’ll see something switch in our market.
The second reason, which might seem a bit shocking, is that new construction stopped after the Great Recession. About a decade ago, there was a period of time where new construction was put on hold, builders and developers weren’t buying land, and banks wouldn’t give loans for those types of purchases. Sadly, a lot of builders also went out of business.
When you go through a recession like that and return to a decent housing market, it takes time for builders to reclaim and develop land. At the moment, we’re seeing new construction happening all over Portland, and you’re probably starting to see the urban growth boundary around the city expand. In the Beaverton/Hillsboro area, especially, you’d be amazed at all the new construction going on.
When the urban growth boundary expands, it takes several years to develop properties. However, we’re seeing a renewed push for new construction, which is being absorbed in kind. In fact, I was at a new construction site yesterday where the builder told me they sold out of properties.
Now we’re seeing high demand from new buyers, relocation buyers, and downsizers. With inventory this lean, this is great news if you’re a seller.
If you have more questions about this topic or are thinking of buying or selling soon, don’t hesitate to reach out to me. I’d love to help you.