There is no question that housing affordability has been one of the most talked about topics in the Portland area since the Great Recession. Rising rents and rising home prices have been a strain on many households across our region.
According to John Burns Real Estate Consulting, only 50% of Portlanders can afford a median priced home with a 5% down payment. This is down from ~63% in 2012 and is likely to go lower since the graph below does not take into account mortgage rate increases following the election.
That said, nothing lasts for ever. Josh Lehner of the Oregon Office of Economic Analysis (@OR_EconAnalysis) wrote an article recently entitled The Housing Inflection Point, in which he argues that affordability has reached an “inflection point”.
He is not saying that home prices will decline or that affordability will return to previous levels. He is simply stating that he believes that affordability will not continue to worsen.
“What I really mean is that affordability will stop getting worse. This goes for both ownership and rentals. Now, it may not improve considerably for some or even most households. And I do not expect affordability to suddenly return to previous levels, but it does mark a step in the right direction. A necessary but insufficient condition, if you will.” – Josh Lehner, Oregon Office of Economic Analysis
Lehner presents some very good data points, including the additional supply of apartments either already on or soon to be on the market (which should stabilize rents), additional housing inventory in Cooper Mountain/South Hillsboro/Clark County (which should slow home price appreciation) and rising household incomes. It’s definitely worth a read.
What do you think? Do you believe housing affordability in Portland will continue to worsen at a pace seen over the last five years? Will it improve? Please share your thoughts in the comment section.