Josh Lehner, a senior economist at the state’s Office of Economic Analysis, says that houses in the Metro area are becoming less affordable for buyers. According to his numbers, at the end of last year, a buyer who put 20 percent down on a house would have devoted 20.1 percent of her yearly income to the home, which is historically very affordable.
Now, because of both rising prices and increased interest rates, that same person would spend 25 percent of her income on the home. That’s a quick and steep jump.
The group that could be hardest hit by this increase are Millennials—the same group that began graduating from college as the world economy crumbled. The oldest Millennials (or Generation Y or Echo Boomers, if you like), are heading into their 30s. As a group ages from 25 to 35 its number of households triples. Portland has a bigger percentage of Millennials than the country and the rest of the state, and they’ll have to face an increasingly expensive housing market.
But while Portland may have more young people dealing with a longer slog into careers and house ownership, Lehner argues that the city’s abundance of the young, hip and well-educated is, in the long run, a serious benefit to the city.
“With such a large age cohort entering into this transition period, which may take a bit longer this time due to the lackluster economic recovery to date,” he writes, “it does bode well for future economic activity over the coming decade or so.”
And while housing prices are rising, Lehner shows that it’s not turning into a big boost for home construction. Jobs have been added, but the level of construction jobs has stayed pretty level since its 2008 nosedive.
Are you a potential home buyer? Are rising prices changing whether you buy a home now or wait? If you’re a Millenial, how does the history of the housing crisis affect your views of home ownership?