Zillow: Portland home prices pushing historical limits of affordability

for sale home lebanon pa
A for sale sign hangs in front of a house in Mount Lebanon, Pa. (The Associated Press)

Elliot Njus | enjus@oregonian.comBy Elliot Njus | enjus@oregonian.com 
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on April 04, 2014 at 8:53 AM, updated April 04, 2014 at 10:27 AM

Portland-area homeowners may soon be spending a bigger chunk of their paycheck on mortgage payments than they have historically, an new analysis suggests.

The real estate website Zillow comparedthe list prices of homes for sale to the percentage of income metro homeowners have historically spent on mortgage payments — 22.7 percent from 1985 to 2000. If a buyer with the median household income would have to spend a greater portion of their income on a given home, it’s considered unaffordable.

By that metric, more than half — 50.3 percent — of Portland area homes are unaffordable, Zillow says. Portland is one of only seven major metros where that’s the case. Nationally, one-third of homes are considered unaffordable to the typical homeowner.

Area homeowners still put a smaller portion of their income toward mortgage payments than they did from 1985 to 2000 — 20.5 percent today compared to 22.7 percent in the historical period.

But if mortgage rates rise above 5 percent, that could flip. And rates are expected to rise this year as the Federal Reserve eases back on its stimulus efforts.

A bigger mortgage burden could lead to homeowners stretching to afford homes, as they did in the housing bubble, said Zillow chief economist Stan Humphries.

“As affordability worsens, we’re already beginning to see more of the kinds of worrisome trends we saw en masse during the years leading up to the housing crash,” Humphries said. “We’re not in a bubble yet, but we’re beginning to see the early signs of one in some areas.”

— Elliot Njus

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About PortlandHouseListings.com - Tom Ramsey, local Realtor

Local Portland Realtor with 10 years experience specializing in residential sales and investment property. Tom Ramsey Oregon Real Estate Principal Broker John L Scott Real Estate Phone: 503-481-0501 tomramsey1@gmail.com www.PortlandHouseListings.com
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