Buying or Selling a Home in Oregon? What to Expect in the 2025 Housing Market.

As we move further into 2025, we’ve been getting a lot of potential home sellers and buyers asking: What can I expect from the Oregon housing market this year? With interest rates still high, housing prices staying fairly flat, and historically low home sales, it's understandable to have some concerns.

Housing Prices in 2025: Will They Continue to Rise?

Despite predictions of a market crash, housing prices have not plummeted. In fact, in Portland, we saw an overall appreciation of about 2% in the past year, with the median home price sitting at about $540,000. In Yamhill County, where I live, prices rose by 4%, with a median home price of $480,000.

While it’s true that the market has seen price fluctuations, we are still seeing price growth in many areas. This is largely due to continued housing shortages and limited inventory, which are expected to keep prices from crashing anytime soon.

The Impact of Interest Rates on the Market

One of the biggest factors affecting the market right now is interest rates. In 2022, mortgage rates were as low as 3%, but by the end of that year, they had skyrocketed to over 7%. Since mid-2022, we’ve seen rates hover around the 6-7% range. For buyers, this means that purchasing a home with a 7% mortgage rate will cost much more than it would have with a 3% rate. For example, a $500,000 home would come with a monthly total mortgage payment of about $3,700 at a 7% rate, compared to just $2,500 at a 3% rate.

This significant increase in monthly payments has made homeownership less affordable for many buyers, and we’ve seen the median age of first-time homebuyers rise from 35 to 38 in 2024. This trend is likely to continue, especially if rates stay elevated.

How Will Oregon’s Housing Market Look in 2025?

Looking ahead to 2025, the most important factor influencing the market will be interest rates. If rates drop, we could see a surge in buyer activity, especially in the spring. On the other hand, if rates stay in the 6.5-7% range, we’ll likely see a more subdued market, with a moderate price appreciation of about 2-4%.

In either case, the market is likely to remain slow for much of 2025 unless we see significant reductions in interest rates, which is unlikely (as far as I can tell). As of now, the Federal Reserve is expected to continue making small reductions to the FED rate, but that likely won’t have much impact on mortgage rates. We will likely experience volatility in mortgage rates, with rates fluctuating between the mid-6% to low-7% range.

Tips for Buyers and Sellers in 2025

If you’re a buyer, it’s important to be prepared for a slower market. As many homeowners are holding onto their properties due to low interest rates, there may be fewer homes for sale. However, the market slowdown could allow you to negotiate with sellers for credits. These credits can be used to reduce your closing costs or even buy down your interest rate. In 2024, many of our clients successfully negotiated seller credits, resulting in lower monthly payments and securing better interest rates.

If you’re a seller, you may find that your home takes longer to sell compared to previous years. Homes are staying on the market longer as interest rates keep many buyers on the sidelines. To sell quickly, you may need to price your home competitively or consider listing below market value to attract potential buyers. With fewer buyers out there, competition among sellers is important to consider.

Preparing for 2025

The bottom line is that while the housing market is still adjusting to the current situation, there is still a major housing shortage that isn’t going to end anytime soon.

If you’re thinking of buying or selling anywhere within 45 minutes of Newberg, our team is here to guide you through every step of the process. We work with some of the best lenders in the state and can help you navigate through the complexities of financing in today’s market. Reach out today to learn more about your options, the best timing for your situation, and how we can help you save money on your mortgage or make the most of selling your home.

Looking forward to assisting you in 2025!

For a more detailed breakdown, be sure to check out our video where we cover everything from interest rates to predictions for the year ahead!