Portland, Oregon Real Estate Market Forces Buyers to Get Creative

The real estate market in Portland, OR is forcing potential buyers to think creatively.

Many neighborhoods—especially in some of Portland’s more desirable locations: Alameda, Mount Taber, Hawthorne, Rose City Park and Multnomah—remain costly and coveted.

Buyers who are ready to purchase a home but can’t afford the high prices of these neighborhoods are looking to smaller homes as alternatives.

Homes with three bedrooms or less are considerably less expensive than a home with three or four bedrooms. This is common sense. But the clever part is when a home has existing space that could in the future be converted into another bedroom or bathroom.

Such was the case when a young couple from Oregon searched for their first home. They had been renting for years, had saved money, and knew where they wanted to live. But they couldn’t afford the down payment on a home that had more than two bedrooms. The Oregonian ran an interesting feature article about the couple.

As recently as last summer, former pro baseball player Given Kutz and his wife, Katie, a nurse, weren't in the market to buy a house. Kutz was transitioning to a law enforcement career, while his wife was preparing to graduate from nursing school.

"We had talked about an investment, a house we knew would appreciate if we put a little work into it," said Kutz, a former University of Portland baseball pitcher who had played for the Great Lakes Loons, a Class A affiliate of the Los Angeles Dodgers. "We originally thought about buying something larger -- three bedrooms, two baths. We had some savings, but with the market doing what it's doing and the money we had, we were forced to look at smaller homes."

Their can do attitude wound up working in their favor. They found a two-bedroom home with a space that could be used for anther bedroom in the future.

Eventually, M Realty broker Alicia Selliken found them a prospect: a two-bedroom, 1910-vintage "Sears bungalow," assembled from mail-order parts, on Northeast 66th Avenue. Kutz loved the Rose City Park neighborhood, the unique character of the home and the fact that it had an unfinished basement. Eventually, the couple offered $213,000: $40,000 under its appraised price. The offer was accepted, and they've already finalized plans to add a bedroom, bathroom and laundry room to the basement.

It seems this is becoming a trend. Three bedroom homes are more expensive and there are more of them on the market. Six times as many three bedrooms were recently listed for sale on the RMLS system in the early part of 2008. The homes tend to stay on the market longer, too. Two-bedroom homes spent an average of 54 days on the market, while three bedroom homes stayed on for 71 days.