In Portland the average family of four makes about $74,700 a year, according to the U.S. Department of Housing and Urban Development. With a 5 percent down payment and no significant debts or bills, the average family can afford a $330,000 house. That puts their mortgage payment at about $1,800 – which shakes out to 30 percent of the family’s income. Any more and the government would categorize the family as cost-burdened, without enough extra money for other necessities.
A few years ago, $330,000 could buy a home in most areas of the city. Now, it doesn’t get you close to the average price in the Portland city limits, which in April was $428,000, according to Regional Multiple Listing Service (RMLS) data. You can’t buy the average home in Beaverton, Hillsboro, Oregon City, Milwaukie or Tigard, either. In fact, the only nearby areas with average home sales prices lower than $330,000 are Yamhill County, Columbia County, the Gresham area, and the towns on the way to Mt. Hood.
That’s a startling change in a short period of time. Home prices have shot up by 30 percent since 2014. The median family income, on the other hand, has only risen 7 percent.
Add to that a fevered market where cash buyers are snapping up houses and desperate families are bidding tens of thousands over asking prices, and you have a recipe for a city that could shut most people out of homeownership.
“A healthy real estate market should have six months’ worth of inventory. We have 1.2,” said Heidi Martin, lending director for the Portland Housing Center. “This is the worst I’ve seen it. Last year, we had an inventory problem but people were able to find houses. This year they can’t get their offers accepted. It’s painful to watch.”
At PHC, Martin helps prospective homebuyers like Doyle secure mortgage loans. The nonprofit offers people a fiscal boost through financial counseling and a down payment match program, which gives participants $3 for every $1 they save, up to $8,000. The PHC can also act as a mortgage broker, saving homebuyers some fees.
Martin boasts that PHC makes a homebuyer a day, which puts the number of people it’s helped buy homes over the past 25 years at close to 10,000. They work with people across the income spectrum and focus mostly on first-time buyers. But even with PHC’s extra help, people continue to get shut out.
“I have clients at every income level and they’re trying to purchase at every level of home, from the starter home to the half-million-dollar mark,” she said. “They’re all having problems. They’re all into multiple offer situations, where there are 10-15 offers on each house. They’re making a dozen offers before they get one accepted.”
Martin says she fears for Portland’s future.
“We’re going to turn into a little San Francisco,” she said. “Only the wealthy will be able to afford to live here and everybody else will be pushed out.”
Middle-income buyers looking for homes in the $300,000 to $350,000 range are having to make big concessions. Martin says the only homes in Portland that are priced that low are in outer Northeast and Southeast Portland. One client just purchased a 680-square-foot fixer for $325,000 in deep Northeast Portland.
“That’s what a starter home is now,” Martin said.
Other clients are pushing their commutes to the edge of what’s comfortable, looking in Oregon City, Southwest Washington, and Columbia and Yamhill counties.
“Our clients keep having to go out further in order to find affordable housing,” she said. “And it is so competitive that when you do find one, you generally are outbid by a cash buyer.”