111,285 Reasons You Should Buy a Home This Year

The financial benefits of buying a home versus renting one are always up for debate. However, one element of the equation is often ignored – the ability to build wealth as a homeowner.
According to the latest research from the National Association of Realtors (NAR):
“Homeownership is a key pathway to building wealth and narrowing the racial income and wealth inequality gap. Housing wealth (equity) accumulation takes time and is built up by price appreciation and paying off the mortgage.”
An increase in equity builds the wealth of the individual that owns it. This wealth can be passed down to future generations. The Federal Reserve in an addendum to their Survey of Consumer Finances explains:
“There are numerous ways families can transmit wealth and resources across generations. Families can directly transfer their wealth to the next generation in the form of a bequest. They can also provide the next generation with inter vivos transfers (gifts), for example, providing down payment support to enable a home purchase or a substantial wedding gift.”
The Federal Reserve also explains another way wealth (including the additional net worth generated by an increase in home equity) can benefit future generations:
“In addition to direct transfers or gifts, families can make investments in their children that indirectly increase their wealth. For example, families can invest in their children’s educational success by paying for college or private schools, which can in turn increase their children’s ability to accumulate wealth.”
Here’s a look at how equity can build your wealth over time when you own a home.
Equity over the Last 30 Years
The NAR research reveals that the average gain for homeowners over the last five years was $139,134 and over the last 10 years was $218,505. Looking even further back in time, the article says:
“Homeowners who purchased a typical single-family existing-home 30 years ago at the median sales price of $103,333 with a 10% down payment loan and who sold the property at the median sales price of $357,700 in 2021 Q2 accumulated housing wealth of $349,258.”
Homeownership builds household wealth which also enables households to more easily move to the home of their dreams. As Mark Fleming, the Chief Economist at First American, explains:
“As homeowners gain equity in their homes, they are more likely to consider using that equity to purchase a larger or more attractive home – the wealth effect of rising equity.”
If you missed out on the equity gains over the last 30 years, don’t fret. Experts are still calling for substantial growth in equity over the next five years.
Looking Forward at the Equity To Come
The most recent Home Price Expectation Survey, a survey of over one hundred economists, real estate experts, and investment and market strategists, expects home values (and therefore equity) to increase as follows:
- 2021: 11.74%
- 2022: 5.82%
- 2023: 3.94%
- 2024: 3.56%
- 2025: 3.55%
The survey estimates a 31.8% cumulative appreciation over the next five years. Using their annual projections, the graph below shows the equity build-up a purchaser could earn, using a $350,000 home as an example:That’s a potential increase in household wealth of $111,285 over five years.
Bottom Line
Owning a home is one of the best ways to grow your wealth over time. House wealth can impact generations. In many cases, the largest single investment a household has is their home. As that investment appreciates in value, the financial options also increase. Call me today to buy your first home in Portland, OR!
Gardner Report for Oregon and SW Washington Q2 2021

The following analysis of the Oregon and Southwest Washington real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact your Windermere Real Estate agent.
REGIONAL ECONOMIC OVERVIEW
The recovery of the jobs lost due to the pandemic continued in the second quarter, but at a significantly slower pace than in the first quarter. Of the more than 285,000 Oregon-based jobs shed during the pandemic, 181,800 have now returned. Though this is positive, state employment is still down more than 100,000 jobs. As I predicted last quarter, it is now clear that Oregon’s efforts to pull back on reopening due to rising COVID-19 cases slowed the velocity of the job recovery, but there was growth in the second quarter.
In Southwest Washington, 16,980 of the more than 22,000 jobs that were lost have returned, and they are returning more quickly than in Oregon.
More hiring has allowed the unemployment rate in Oregon to drop from 6% at the end of the first quarter to 5.6% in June. The jobless rate in Southwest Washington currently stands at 6%, its lowest level since the pandemic took hold.
OREGON AND SOUTHWEST WASHINGTON HOME SALES
❱ In the second quarter of the year, 19,614 homes sold, an increase of 37% from the second quarter of 2020. Although an increase was certainly expected given where we were last year, I was also very pleased to see a 59% increase in sales from the first-quarter figure.
❱ The largest increase in sales from the first quarter was in the greater Portland metro area, but all counties contained in this report experienced more transactions.
❱ Sales rose in every county other than Tillamook compared to a year ago, but this is a very small market that regularly experiences extreme swings in the number of sales. In markets where sales rose, all but two of them saw double-digit gains.
❱ Demand remains strong but supply is still lagging. More buyers are getting off the fence after mortgage rates rose in the first quarter. Although rates have pulled back somewhat, the specter of them rising has generated a lot of competition for the homes that are available.
OREGON AND SOUTHWEST WASHINGTON HOME PRICES
❱ The average home price in the region continues to soar. Prices were up 26.1% year over year to $532,397 and were 5.8% higher than in the first quarter of the year.
❱ Relative to a year ago, Tillamook County again led the market with the strongest annual price growth, but it is a very small market prone to significant swings. The most expensive market was Hood River County, where the average sale price was $728,700.
❱ All counties contained in this report saw prices rise more than 10%. Prices in Jackson, Klickitat, and Wasco counties were lower than in the first quarter, but I do not see this as being pervasive and I expect them to pick back up as we move through the rest of the year.
❱ Prices continue to rise at an astonishing pace, but many areas are hitting an affordability ceiling. This, in concert with modest increases in mortgage rates, is likely to temper price growth—but just not yet. This year, prices will continue to increase at well above the long-term average.
DAYS ON MARKET
❱ The average number of days it took to sell a home in the region dropped 30 days compared to the second quarter of 2020. It took 16 fewer days to sell a home compared to the first quarter of this year.
❱ The average time it took to sell a home in the second quarter of 2021 was 35 days.
❱ With the exception of Benton County, which was up nine days, every county saw the length of time it took to sell a home drop compared to a year ago. Benton was also the only county that saw market time rise compared to the first quarter of 2021.
❱ Homes again sold the fastest in Washington County, where it took only 11 days for the average home to go under contract. An additional 16 counties saw the average market time drop to below a month.
CONCLUSIONS
This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.
Home sales continue to grow, and robust demand is causing prices to rise significantly, resulting in a market that strongly favors sellers. The additional supply of homes that I’m predicting for 2021, combined with modestly rising interest rates, may start to slow the momentum in price growth, but for now I have moved the needle further in favor of sellers.
ABOUT MATTHEW GARDNER
As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.
In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.
Surprising Shift Favors Homeowners: Buyers Now Prefer Existing Homes
In April, the National Association of Home Builders (NAHB) posted an article, Home Buyers’ Preferences Shift Towards New Construction, which reported:
“60% of people who were looking to buy a home in 2020 said they’d prefer new construction to an existing home.”
However, it seems buyers are now shifting their preferences back to existing homes.
The latest Consumer Confidence Survey reveals the percentage of Americans planning to buy a home in the next six months is virtually the same as it was back in March. However, the percentage that plan to buy a newly constructed home is lower for that same period.
NAHB confirms this sentiment in their latest Housing Trends Report. The organization explains that existing homes are now the top preference among today’s buyers. Here’s a breakdown of those findings:
Why the shift?
There are several reasons why buyer preference is shifting. Here are two that impact purchasers looking to move in now:
- The process may move faster. Builders may not be able to guarantee when the house will be complete and ready for move-in due to supply chain challenges with materials like lumber and appliances. If you buy an existing home, not only is it ready, it also likely has a refrigerator, range, and other necessary home appliances already.
- There are no unexpected costs during the buying process. With the price of land, labor, and lumber being so volatile, many builders are including an escalation clause in the price negotiation to cover rising expenses. With an existing home, the final price you will pay is negotiated upfront.
Bottom Line
If you’re a homeowner looking to sell, your house is more attractive to a greater number of buyers as compared to earlier in the year. This might be the time for us to connect to discuss the possibility.
Diving Deep into Today’s Biggest Buyer Concerns

Last week, Fannie Mae released their Home Purchase Sentiment Index (HPSI). Though the survey showed 77% of respondents believe it’s a “good time to sell,” it also confirms what many are sensing: an increasing number of Americans believe it’s a “bad time to buy” a home. The percentage of those surveyed saying it’s a “bad time to buy” hit 64%, up from 56% last month and 38% last July.
The latest HPSI explains:
“Consumers also continued to cite high home prices as the predominant reason for their ongoing and significant divergence in sentiment toward homebuying and home-selling conditions. While all surveyed segments have expressed greater negativity toward homebuying over the last few months, renters who say they are planning to buy a home in the next few years have demonstrated an even steeper decline in homebuying sentiment than homeowners. It’s likely that affordability concerns are more greatly affecting those who aspire to be first-time homeowners than other consumer segments.”
Let’s look closely at the market conditions that impact home affordability.
A mortgage payment is determined by the price of the home and the mortgage rate on the loan used to purchase it. Lately, monthly mortgage payments have gone up for buyers for two key reasons:
- Mortgage rates have increased from 2.65% this past January to 2.9%.
- Home prices have increased by 15.4% over the last 12 months.
Based on these rising factors, a home may be less affordable today, but it doesn’t mean it’s not affordable.
Three weeks ago, ATTOM Data released their second-quarter 2021 U.S. Home Affordability Report which explained that the major ownership costs on the typical home as a percent of the average national wage had increased from 22.2% in the second quarter of 2020 to 25.2% in the second quarter of this year. They also went on to explain:
“Still, the latest level is within the 28 percent standard lenders prefer for how much homeowners should spend on mortgage payments, home insurance and property taxes.”
In the same report, Todd Teta, Chief Product Officer with ATTOM, confirms:
“Average workers across the country can still manage the major expenses of owning a home, based on lender standards.”
It’s true that monthly mortgage payments are greater than they were last year (as the ATTOM data shows), but they’re not unaffordable when compared to the last 30 years. While payments have increased dramatically during that several-decade span, if we adjust for inflation, today’s mortgage payments are 10.7% lower than they were in 1990.
What’s that mean for you? While you may not get the homebuying deal someone you know got last year, that doesn’t mean you shouldn’t still buy a home. Here are your alternatives to buying and the trade-offs you’ll have with each.
Alternative 1: I’ll rent instead.
Some may consider renting as the better option. However, the monthly cost of renting a home is skyrocketing. According to the July National Rent Report from Apartment List:
“…So far in 2021, rental prices have grown a staggering 9.2%. To put that in context, in previous years growth from January to June is usually just 2 to 3%. After this month’s spike, rents have been pushed well above our expectations of where they would have been had the pandemic not disrupted the market.”
If you continue to rent, chances are your rent will keep increasing at a fast pace. That means you could end up spending significantly more of your income on your rental as time goes on, which could make it even harder to save for a home.
Alternative 2: I’ll wait it out.
Others may consider waiting for another year and hoping that purchasing a home will be less expensive then. Let’s look at that possibility.
We’ve already established that a monthly mortgage payment is determined by the price of the home and the mortgage rate. A lower monthly payment would require one of those two elements to decrease over the next year. However, experts are forecasting the exact opposite:
- The Mortgage Bankers Association (MBA) projects mortgage rates will be at 4.2% by the end of next year.
- The Home Price Expectation Survey (HPES), a survey of over 100 economists, investment strategists, and housing market analysts, calls for home prices to increase by 5.12% in 2022.
Based on these projections, let’s see the possible impact on a monthly mortgage payment:By waiting until next year, you’d potentially pay more for the home, need a larger down payment, pay a higher mortgage rate, and pay an additional $3,696 each year over the life of the mortgage.
Bottom Line
While you may have missed the absolute best time to buy a home, waiting any longer may not make sense. Mark Fleming, Chief Economist at First American, says it best:
“Affordability is likely to worsen before it improves, so try to buy it now, if you can find it.”
So, if you are a Portland area first time home buyer, get in touch with me and let’s get you in the market!
What Do Experts See on the Horizon for the Second Half of the Year?

As we move into the latter half of the year, questions about what’s to come are top of mind for buyers and sellers. Near record-low mortgage rates coupled with rising home price appreciation kicked off a robust housing market in the first half of 2021, but what does the forecast tell us about what’s on the horizon?
Mortgage Rates Will Likely Increase, but Remain Low
Many experts are projecting a rise in interest rates. The latest Quarterly Forecast from Freddie Mac states:
“We forecast that mortgage rates will continue to rise through the end of next year. We estimate the 30-year fixed mortgage rate will average 3.4% in the fourth quarter of 2021, rising to 3.8% in the fourth quarter of 2022.”
However, even as mortgage rates rise, the anticipated increase is expected to be modest at most, and still well below historical averages. Rates remaining low is good news for homebuyers who are looking to maximize their purchasing power. The same report from Freddie Mac goes on to say:
“While higher mortgage rates will help slow the pace of home sales and moderate house price growth, we expect overall housing market activity will remain robust. Our forecast has total home sales, the sum of new and existing home sales, at 7.1 million in 2021….”
Home Price Appreciation Will Continue, but Price Growth Will Likely Slow
Joe Seydl, Senior Markets Economist at J.P. Morgan, projects home prices to continue rising as well, indicating buyers interested in purchasing a home should do so sooner rather than later. Waiting for rates or home prices to fall may not be wise:
“Homebuyers—interest rates are still historically low, though they are inching up. Housing prices have spiked during the last six-to-nine months, but we don’t expect them to fall soon, and we believe they are more likely to keep rising. If you are looking to purchase a new home, conditions now may be better than 12 months hence.”
Other experts remain optimistic about home prices, too. The graph below highlights 2021 home price forecasts from multiple industry leaders:
Inventory Remains a Challenge, but There’s Reason To Be Optimistic
Home prices are rising, but they should moderate as more housing inventory comes to market. George Ratiu, Senior Economist at realtor.com, notes there are signs that we may see the current inventory challenges lessen, slowing the fast-paced home price appreciation and creating more choices for buyers:
“We have seen more new listings this year compared with 2020 in 11 of the last 13 weeks. The influx of new sellers over the last couple of months has been especially helpful in slowing price gains.”
New home starts are also showing signs of improvement, which further bolsters hopes of more options coming to market. Robert Dietz, Chief Economist at the National Association of Home Builders (NAHB), writes:
“As an indicator of the economic impact of housing, there are now 652,000 single-family homes under construction. This is 28% higher than a year ago.”
Finally, while it may not fundamentally change the market conditions we’re currently experiencing, another reason to be optimistic more homes might come to market: our improving economy. Mark Fleming, Chief Economist at First American, notes:
“A growing economy in the summer months has multiple implications for the housing market. Growing consumer confidence, a stronger labor market, and higher wages bode well for housing demand. While a growing economy and improving public health conditions may also spur hesitant existing owners to list their homes for sale, it’s unlikely to significantly ease the super sellers’ market conditions.”
Bottom Line
As we look at the forecast for prices, interest rates, inventory, and home sales, experts remain optimistic about what’s on the horizon for the second half of 2021. Let’s connect today to discuss how we can navigate the Portland market together in the coming months.