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on April 04, 2014 at 8:53 AM, updated April 04, 2014 at 10:27 AM
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- Zillow: Portland home prices pushing historical limits of affordability
- 1 in 7 Portland-area homes sold in less than 3 days, report says
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- Millennials aging into major players in real estate market
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