Chris Bonner has seen a sea change for middle-income earners since she became a real estate broker in 1991 — and before that, when her father, Ernie Bonner, helped shaped Portland’s livability reputation as director of the city’s Bureau of Planning.
At $290,000, the price tag on Ryan’s home is an anomaly in Portland. The city’s current median home price is $422,450. A down payment of 10 percent on a house of that value pencils out to $42,000 — more than half the $73,000 annual earnings for a median-income family of four. That’s a lot to save when rents are exploding and incomes are stagnating, Bonner says. And depending on how much of a monthly mortgage payment a family can afford, the down payment may need to be higher.
“My clients are well-qualified, have good jobs and can make a 10 percent down payment, but are having a super-hard time,” she says. “I just tried to get a $440,000 house for a client, and there were 21 other bidders, including three cash offers.” (More than 30 percent of Portland home sales in 2016 were all-cash transactions, which sellers prefer because they are less risky and easier to close than mortgage-financed deals.)
Even when buyers can get their bids accepted, they may have to use more of their earnings to pay off their mortgage loan than their parents did, Bonner adds.
“If you are below 100 percent median family income, you still can find a very small house, which probably has problems with it, on the city’s far east side,” Bonner says. “But if you want something west of I-205 — forget it.”
Those in the business of helping lower-income families close the gap say the once-high obstacles to owning a home have become almost insurmountable. Felicia Tripp, deputy director of the nonprofit Portland Housing Center, says that as recently as the early 1990s, “most renters in Portland were young adults who, within a few years, could assemble enough savings to make a down payment on a modest home somewhere in Portland.” Now, she’s sending clients to ever more distant suburbs.
“The usual barriers of getting good credit, enough income requirements for loans and a down payment have increased far beyond the financial capabilities of many of our clients,” says Erica Calderon, homeownership manager at Hacienda CDC, a nonprofit in Northeast Portland that helps many Latino potential homebuyers.
A set of maps produced by economic consulting firm ECONorthwest and the Portland Housing Center show the trend with striking clarity.
On 16 maps, one for every year from 2000 to 2015, the city is a dense honeycomb of color-coded cells. Affordable areas, where homeownership costs would consume 30 percent or less of earnings for a median-income family of four, are green. Unaffordable areas are yellow, orange and (least affordable) red.
By 2015, there is only a smattering of green cells west of Interstate 205. By 2020, a projection based on current market trends, the whole metro area, from Hillsboro to Gresham, is mostly red.
Lorelei Juntunen, the study’s primary author, boils down the many layers of hidden data to a grim statistic: from 2001 to 2016 the portion of Portland homes sold at prices affordable to median-income families fell from 57 percent to just 36 percent.
That’s a drop of more than 20 percentage points, a massive narrowing of homeownership access for Portland families. If housing and incomes follow a straight-line trend, the portion of homes affordable to middle-income families will fall to just 12 percent in 2020, Juntunen says.
The maps are confirmation of what affordable housing advocates such as Emily Reiman, executive director of the statewide Neighborhood Economic Development Corp., already know. “For lower-income households, income has been flat for decades, and housing costs are out of control,” Reiman says.
But the income/housing-cost ratio doesn’t tell the whole story; wealth is a factor, too, Reiman explains, and it’s eroding. College debt has begun financially hobbling many people well into their 30s, preventing them from qualifying for mortgages.
As families reset their strategies and expectations, shifting their home-search parameters to cheaper communities or resigning themselves to renting (often at prices comparable to a mortgage payment), what are they losing? And what is the city losing, as a wealthier class of owners takes their place?