Owning your own home is an American rite of passage, but it’s becoming increasingly difficult in today’s real estate market, especially if you want to purchase an existing home in the Portland area. With limited inventory and prices that have been on an upward trend for almost a decade, the opportunities for purchasing a home are few and far between, especially if you’re working with a limited budget.
However, buying an existing home is not the only way to achieve your dream of home ownership. Building a new custom home is not only possible, it’s a way for you to build equity, get more of the features you want, and finally get your dream home. If you are weighing your options between building versus buying, or if you haven’t even thought about new construction, consider these reasons to explore building a new home.
Oregon Housing Shortage
Like much of the nation, Oregon is experiencing a housing shortage, and the state’s legislators have taken notice. The organization Up for Growth has reported that the state underproduced housing by 155,000 units between 2000 and 2015. The trend continued in the following years, with only 38,000 houses being built in the two years spanning 2017 and 2018, paired with an increase in the population of 65,000 over the same period. The Portland area has been hit particularly hard by the housing shortage. According to the report,
“While most counties in Oregon saw production ratios decrease over time, the Portland metro region has experienced some of the steepest declines since 2010. Multnomah County fell from producing 76 homes for every 100 new households in 2000-2016, to only 59 in the 2010-2016 timeframe.”
These factors have contributed to a housing crisis that is evidenced by rising home costs, increasing rents, and cost-burdened households that spend too much of their monthly income on housing costs.
In response, state officials have prioritized efforts to increase the housing supply. In addition to limiting cost increases for renters, these efforts include providing subsidies for low- and middle-income families, allowing multiple units on single properties, shortening the time required to secure building permits, and taking other measures to encourage new development. For people interested in building a new home in Portland, this is a good time to start the process.
Portland Housing Prices
One of the most visible effects of the housing shortage is the steady increase in Portland-area homes. According to Zillow, the median home value in Portland is $424,800 (and it is predicted to rise 3.0-3.5% over the next year. Although this increase is less steep than the the increase from 2011 to 2017, prices are expected to continue to go up. For potential homeowners, this means the longer you wait, the higher the sales price will be. Combined with potential increases in mortgage rates and income growth rates that are not keeping up, existing homes are likely to become less affordable over time for most people.
However, increasing prices haven’t slowed down the market. On the contrary, Zillow reports a steadily decreasing average time on the market, which means that homes are selling faster than ever. For potential buyers, this means you must make fast decisions and be ready to make an offer on a home that suits your needs. Though some homeowners may be comfortable with this scenario, it often means settling for a house that is just good enough, rather than getting exactly what you want in a home.
Building New in Portland
With limited inventory, increasing prices, and shorter time on the market, buying an existing home is not a viable option for everybody. However, building a new home could very well be an option, especially if you work with a Portland home builder that has experience with affordable custom homes.
As an example, as I write this article there are 555 homes for sale on Zillow priced at $500,000 or less, and many of the most affordable options would require extensive remodeling and repairs, so those costs must also be factored into any comparison. There are also more than 100 lots for sale under $300,000, many of which require little site work because they are in an urban area with existing connections to utilities, and the lots have already been graded. The starting prices for Adair Homes in the North Willamette Valley range from $116,499 for a 1,094-square-foot home with two bedrooms and two bathrooms to $282,499 for a 3,495-square-foot home with four bedrooms and 2.5 bathrooms. Even after factoring in the costs of land and site development, it’s easy to see how building a new home can be financially comparable to buying an existing home.
These numbers are just for the city of Portland and do not include the surrounding areas. If you’re interested in living in a Portland suburb, it’s easy to do the same type of comparison for yourself. It’s even easier when you’ve got real numbers to work with, so consider talking to a builder about your options as you explore new home possibilities.
Benefits of Building New
Building a new home comes with a broad range of benefits compared to purchasing an existing home. First, you know exactly how the home was built, what materials were used, the location of wiring and ductwork, and every other detail. You don’t often get this information when buying a home that was built decades earlier, especially if it has been remodeled in the past.
Second, you can customize your new home to suit your current and future needs. Buying an existing home in a tight real estate market often means you have to compromise on getting exactly what you want. When you build new, you can get more of your wish list, and best of all, you get to make all the decisions about what you’d like to prioritize. For example, if you want to upgrade the tile in the master bath but save on the finishes in a powder room, you get to make that call and apply those savings elsewhere.
Third, a new home means new appliances, which translates to less maintenance, fewer repairs, and better reliability. When you build new, you know you won’t have to replace the furnace for a long time, and the water heater isn’t going to break down in a few years. For many people, this means you don’t have to put away as much in an emergency fund for a few years, so you can put more into the initial investment into the house. On the other hand, if you buy an existing house, you usually need to keep some money in your pocket or maintain a home equity line of credit for unexpected repairs or purchasing new appliances when the old ones fail.
Fourth, new homes are also built to better standards than older homes. They are more efficient, which means they cost less to operate so you save on monthly expenses. They are also more comfortable because they’re less drafty and keep out more noise through better constructed walls and higher-quality windows and doors. New homes also use more modern heating, cooling, and ventilation systems to maintain the desired interior environment.
Finally, when you build a new home, everything is ready the day you move in. You don’t have to remove unwanted carpet, clean the cabinets, or paint over last decade’s trendy paint colors. You get to choose the flooring, finishes, and paint colors so your home looks exactly the way you want it to from day one.
The process of building a new home might take longer than the process of buying an existing one, but this isn’t necessarily always the case, especially when housing inventory is low and homes are moving fast. When looking for an existing home, you have no idea how long the process will take. This can be challenging for families who are renting or who need to sell a home to finance purchasing a new one. When you build new, the timeline is predictable and you have plenty of time to plan around your move-in date.
Adair Homes: Your Portland Home Builder
If you’re looking for home builders in the Portland area, get in touch with a Home Ownership Counselor at our North Willamette branch office in Aurora. Even if you’re not sure whether you’re able to build, our team will work with you to help you determine your budget and choose the floor plan that matches your needs. We can also help you secure financing, so don’t worry about getting prequalified before you come in. Schedule an appointment today to get started.