Four factors driving down Pearl condo prices
Local broker says it's not all about safety problems
We asked Chris Mackovjak, a broker with Realty Portland and a longtime member of the Pearl District Neighborhood Association, to comment for yesterday’s post about residents moving out of the district as condominium values drop. His thorough and rapid response suggested that he had thought about this issue before.
By Chris Mackovjak
That [two-fold trend] is correct, and the cause is multi-faceted. Here are the four drivers, three of which are primarily related to Portland, while the other is national.
1. Safety and livability concerns have caused people to leave the Pearl and downtown. The same concerns have caused would-be buyers to hold off.
2. Demographics. Condo owners in the Pearl tend to be older, and they are starting to sell their condos to move into retirement communities. There isn’t a large group of buyers coming in after them, so more sellers competing for fewer buyers lowers prices.
3. Property taxes. Condo taxes are notoriously disproportionate to values. A condo that sells for $350,000 could have property taxes of $8,000, which hurts affordability.
4. Homeowners Association dues and special assessments. This is national and a big driver. Higher monthly costs reduce how much buyers can qualify for, putting downward pressure on prices.
My short take is that condos are undergoing a structural repricing based on these factors.
That’s the negative side. Here’s the positive:
The impression of buyers is that safety and livability are improving downtown. I sold four condos in the last few months to out-of-town buyers, and they love Portland. They love the people, the nature, the food and the lifestyle, and they’re excited to be here.
Portland is still one of the best lifestyle cities in the country, and I expect we’ll start to see people moving here again. I’m also starting to see more locals, especially those downsizing, explore moving downtown again. All-in-all, I’m still bullish on the Pearl.
We bought our Pearl condo in mid-2015 and since then more than a dozen new condo and appartment structures have been built in the Pearl area. So we'd list over-supply as a major contributor to price drop.
Chris’s comments are spot on, based on our experience owning and then selling two condos in the Pearl between 2009 and 2023. I would add two other factors to the depressed condo resale market. First, good paying jobs based in downtown or the Pearl itself are far fewer in number than in the mid to late 2010s, giving less reason to want to live on the West side of Portland. Second, the number of retail businesses that used to populate the Pearl has dramatically declined over the past decade from what it was in the early 2010s. Compare the Pearl with NW 23rd Street and other vibrant neighborhoods in Portland, Beaverton, Hillsboro, and Lake Oswego where retail is thriving and few store fronts are vacant.