Shhh, Don't Share This News About Portland
After a New York Times real estate article points out that on top of being one of America's most livable cities it is also one of its most affordable, there could be mass migration to Portland.
An analysis by a housing group reveals that rents in Portland are quite affordable compared to many metropolitan areas.
"According to the Metro Multifamily Housing Association, which represents residential property-managers, the average rental price for a studio in the Southeast section is $525, while a two-bedroom apartment leases for $724. In the Northwest area, which includes the trendy Pearl District, studio rentals average $571 and two-bedrooms cost about $971."
"Buying options are comparatively affordable, as well. While the rest of the country has seen housing prices boom and now fall, Portland has remained reasonably stable.
According to the Regional Multiple Listings Service for Oregon, the average sale price for a condominium in September was $257,200, up from $246,800 in 2006. The median price of a single-family detached home was $308,003, compared with $380,200 in the Seattle-Tacoma area, $595,200 in San Diego and $748,100 in the San Francisco Bay area, according to Portland State University’s Center for Real Estate."
"As the housing markets in Los Angeles, San Francisco and Seattle remain high, Portland has become one of the few affordable urban options on the West Coast. Couple that with its natural beauty, its activist personality and its creative sensibility and the appeal is clear.
“It’s very common that someone will visit a friend,” Mr. Rapaport, a downtown developer said, “and then they’re moving here three months later.”
- Login or register to post comments
- Email this page
Related News Stories
An In-Depth Look At Housing In Portland, Oregon - Jun 28, 2007
Lack Of Affordable Housing Hits Migrant Workers Hardest - Jun 21, 2007
Fears Over Immigrants Stymie Accessory Unit Ordinance - May 14, 2008
Homeowner Associations Feel Impact Of Foreclosure Crisis - May 14, 2008
Housing Debacle Threatens Renters - May 09, 2008
don't use the median!
a median price of 300k means that half of all houses are cheaper.
if you are thinking about "starter houses", that bottom half is what concerns you.
a quick glance at the listings turned up a good number of 2br houses for under 250k in walkable hoods (few blocks from the light rail, within 5 miles of downtown). you can even find a few that dip below 200k.
if you add in single car ownership, or the incredibly short distances in car commutes, this is incredibly affordable living for the west coast.
but then again, it won't be for long if we keep talking about it.
Affordable? really?
While Portland may be "affordable" compared to other West Coast cities, it is still an expensive place to live. $300k for a house is quite a bit of money. It's not clear to me how people can actually afford to buy homes there (!). If you use the rough calculation where house price = 2.5 * annual income, then a "median" household would have to earn $120k to buy a home. That's a significant salary, most likely far greater than that of people under 35.
--Steve (http://grossreport.blogspot.com)
What is Affordable?
I believe spending no more than 30% of one's income on housing is considered "affordable." According to my calculations, starting at $300k for a house with a standard fixed-rate, 30-year mortgage at 6% interest (using simple numbers here), a single person would need an annual income of $72k to "afford" a $300k house. IMO, this is well within the range of people in their 30's who budget smartly.
Follow-up to the numbers
A few follow-up questions:
(1) Should a mortgage payment be 30% of income after taxes? If so, you need about $100k in income to get $72k after taxes. That raises the bar a bit.
(2) Should housing costs overall total 30%, or just mortage payments? If you factor in taxes and maintenance, then you may very well need to add several thousand in expenditures per years. How does that affect the calculation?
--Steve (http://grossreport.blogspot.com)
Factor In Cost Of Transportation
It becomes a bit more affordable when you factor in the lower cost of transportation when you live in Portland's walkable neighborhoods (compared with the cost of transportation in sprawling cities like Atlanta).
Charles Siegel
'Walkable neighborhoods' are pricey neighborhoods
The walkable neighborhoods are the "close-in" neighborhoods and the most pricey. The more affordable homes are in your typical auto-centric subdivisions where ammenities spread out and you need a car to access them.
Catch 22.
Walkable neighborhoods are desirable.
The walkable neighborhoods are the "close-in" neighborhoods and the most pricey.
Right. They are the most desirable and the rents are bid up to live there. This fact is a big reason why NU/SG developments are increasing in number.
Best,
D
I concur. But Portland is
I concur. But Portland is not much different than other US cities outside of this 'walkable' core.
Sprawl type development still reigns, and the affordable homes are in Sprawlsville, not the 'walkable' core. It is these homes, not the ones in the central core which are keeping the AVERAGE housing costs in Portland low.
Also, in Portland as everywhere else, the less wealthy (and those least able to afford auto costs) are pushed into the outlying areas where having a car is essential.
Not really
Most people in Portland still drive - auto ownership and use isn't much different there than in other cities/metros. In fact, you're probably more likely to need a car there than in Boston, DC, or NYC, in my opinion. But, it all depends on your situation. Portland is neither a cheap nor expensive city (for-sale housing)compared to a wide array of other US cities. I think the article was comparing it to other major west coast metros. It's the cheapest of them when comparing median home prices. Of course, I wish someone would at least mention when doing this comparison with Seattle that Washington has no state income tax and incomes, I believe, are somewhat higher there.
Affordable housing groups like to use 30% of gross income for a monthly house payment as a guideline for affordability which is fine. A Fannie Mae conventional mortgage allows up to 35% of gross income, if you have no other debt (excluding student loans, I think).
Finally, of course, it depends where you live in the area. More than other west coast cities, Portland has a wide variance of housing cost (for-sale) between downtown, the Pearl or living in Beaverton. But, the median home prices are calculated on a metro basis.
If you're a complete geek like me when it comes to this stuff, you might also calculate the differences in purchasing power since the median house sold in Portland may be smaller and have less land than the median in other areas. Just something to consider.
Cost of transportation
What are the specific cost savings you have in mind? Let's say I, a car-owner, move to Portland. Because I've already sunk funds into car ownership, I'm going to keep my car. Therefore, the transportation cost savings would have to come in the form of reduced fuel costs, reduced maintenance costs, and (perhaps!?) reduced insurance. Can you comment a bit on this?
Thanks,
--Steve (http://grossreport.blogspot.com)
Specifics About Cost Of Transportation
There are some obvious ones. If you drive less, you can save on all the variable costs of car ownership, such as cost of gasoline. If you are a family that needs one car instead of two, you sell one of your cars and save half the fixed cost also.
For more details, do a Google search on "location efficient mortgage." That type of mortgage lets lenders to give larger loans to people based on the lower transportation cost at the location of their house.
Charles Siegel
Car-Sharing, too
What an increasing number of people are finding in Portland, and elsewhere, is that taking advantage of car-sharing allows them to reduce from two cars to one, or even eliminate owning an auto altogether, reducing your automobile costs to a (mostly) per-trip basis.
There are some trips, even here in Portland, where a car makes the most sense. But many people find that it's possible to take most trips using transit, bike or your own two feet, depending on where in Portland you live.
Additional Cost of annual mileage
If you want to further geek out it occurred to me that you could also calculate the cost of mileage on your resale price. I own a car, but I make an effort to ride my bike at least once a week. I don't live very far from work so I harbor no illusions that I'm saving the planet. I have a clunker, but my boss has a nice car. I was thinking of calculating the number of miles he would avoid putting on his car over, say, 5 years then see if that made a difference to which mileage category he would fall into in the Kelley Blue book. I believe the AAA has uses a per mile cost of operating a vehicle as .60/mile which factors in the depreciation.
Additional savings in fewer miles.
I'm a frequent bike commuter - when I lived in Sacramento it was 14 miles one way. Anyway, by the time I got home after that, all my stress was gone and I didn't need to kick the dog when I got in the door.
So the vet bills were lower, my health care bills were lower, my time was better spent (becoming more valuable), and my liquor bills were lower than if I were stuck in Sacto traffic looking at the Bay Areans driving up the hill to Tahoe. My vehicle lasted longer, I didn't spend that much on gas...but I did eat a whole lot more...
Best,
D