What?? Is the Portland housing market finally cooling off?
Don’t hold your breath. It isn’t happening.
At least, not unless we have a regional or national economic catastrophe. Portland is rapidly becoming as unaffordable as San Francisco for young, two earner families and for everyone else as well.
Below there’s a link to an article last week in the Portland Tribune. Or, for a more interesting experience, check out the article on my web site: www.johndescamp.com and click on the tab at the top titled: BLOG
In any event, see the article for the details. There are lots of them, and they’re all depressing. In particular, have a look at the graph on page 2. The trend of home prices in Portland has been almost steadily upwards for 26 years–since 1992. Even at the bottom of the housing crunch, in 2011, the median home price was higher than in 2004.
The bottom line:
- Median home prices are higher than they have ever been; higher, even, than at the top of the housing bubble in 2007.
- In a single year–the 12-month period between July 2015 and July 2016– the median home price in Portland rose by 11.45 %
- Apartment rental rates are climbing even more rapidly.
- In the meantime, medium family income has been virtually flat.
The take away? “Portland, we have an affordability gap”.
And that gap isn’t going away. As a friend of mine says, “pigs will fly before that happens” — (He likes pigs).
If your clients (millennials or otherwise) are thinking seriously about buying a house “in a year or two” they should budget between 12 and 24% more than today’s prices. And if they’re going to continue renting, they can expect the percentage increase in their rent to be even higher.
Meanwhile, back at the ranch, most investment portfolios aren’t growing at anywhere near that rate. The result: future home buyers run the risk of having to allocate an even greater percentage of their available assets and income to housing expense.
Is there a solution? Move to Detroit? Longview? Move in with your parents? Not good options for most people. Most of the financial advisors and real estate professionals I’ve talked with believe the least risk option is to purchase a home in the near term and lock in current pricing. Or, for those who believe home prices are going to head downward at some point in the near future, wait and buy later.
Just remember, we haven’t seen any flying pigs lately. And it’s a long drive if you’re commuting from beautiful downtown Longview.