Family of four on $55k in Portland? (Oregon City, Milwaukie: 2013, rental)

[Yankeemama]

I agree with a few posters in regards to renting an apt in an outer suburb with good schools. I just can't see finding a house with the OP's budget. The OP could maybe find something in Aloha but the schools there can be iffy from what I hear from people who have had direct experiences rather than just reputation. On the West side, many families rent because of the influx of workers here so there is no stigma in being a renter from what I have heard. I just moved from inner NE Portland where s family would have to rent a house to be in our neighborhood or live in a pretty crappy apartment which wouldn't be big enough for a family. Out in the burbs though I see many nice apartment buildings. I would also live in the metro a while before finding a house. We bought in 2009 from out of state because the home prices just tanked so it was smart to buy then. I would wait to buy if we were moving right now. Good luck to the OP as I remember him posting a while back!

[dots45]

The downpayment saved up is great! I think, however, you'd have to choose between looking in the outer suburbs for a house, or going for a townhome or condo in one of the more desirable neighborhoods. I just don't see being able to swing it otherwise in this crazy housing market. I've heard so much second hand info from friends on all of the bidding wars that are going on. I think the missing piece that isn't here is if there is a commute involved (or working from home). Because for me, that would be a huge factor.

[pdwpdx]

So I've read that in general, you can afford a house that costs 2.5 or 3 times your gross household income.

According to Zillow, the median home price in Portland is currently $327,500.

$327,500 / 2.5 = $131,000 gross income
$327,500 / 3 = $109,000 gross income

Portland's median household income is currently about $55,000

$55,000 X 2.5 = $137,500 house
$55,000 X 3 = $165,000 house

A median-income family in Portland can only afford a house that costs 1/2 or less the median home value.

Something is very wrong here, right? Where is a median-income family going to find a quality home in Portland for $140-$170K?

[Yankeemama]

Originally Posted by pdwpdx

So I've read that in general, you can afford a house that costs 2.5 or 3 times your gross household income.

According to Zillow, the median home price in Portland is currently $327,500.

$327,500 / 2.5 = $131,000 gross income
$327,500 / 3 = $109,000 gross income

Portland's median household income is currently about $55,000

$55,000 X 2.5 = $137,500 house
$55,000 X 3 = $165,000 house

A median-income family in Portland can only afford a house that costs 1/2 or less the median home value.

Something is very wrong here, right? Where is a median-income family going to find a quality home in Portland for $140-$170K?

Great post! Thanks for doing the math for us.

[VTHokieFan]

Originally Posted by pdwpdx

So I've read that in general, you can afford a house that costs 2.5 or 3 times your gross household income.

According to Zillow, the median home price in Portland is currently $327,500.

$327,500 / 2.5 = $131,000 gross income
$327,500 / 3 = $109,000 gross income

Portland's median household income is currently about $55,000

$55,000 X 2.5 = $137,500 house
$55,000 X 3 = $165,000 house

A median-income family in Portland can only afford a house that costs 1/2 or less the median home value.

Something is very wrong here, right? Where is a median-income family going to find a quality home in Portland for $140-$170K?

That's why home affordability is an issue here. Off Portland for a bit, but I was reading that San Francisco has the gini coefficient of Guatemala (i.e. income inequality). This is where Seattle is en route to, and the train is just about to leave the Portland station.

[AndyAMG]

I also read recently, couldn't find it again. Portland has the lowest percentage of cash buyers anywhere in the US at 21% and falling. In 2014 it was 28%. To me that says this thing is about to crash. Cash buyers are now finding the market overpriced.

Many have assumed California and cash buyers are propping up the market but at 21% and falling it is quite obvious people are now most definitely being forced to buy homes they can afford in theory but not in practice.

Found it, o-live, of course.

All-cash home sales slightly down in Portland area, report finds | OregonLive.com

[bler144]

Originally Posted by AndyAMG

I also read recently, couldn't find it again. Portland has the lowest percentage of cash buyers anywhere in the US at 21% and falling. In 2014 it was 28%. To me that says this thing is about to crash. Cash buyers are now finding the market overpriced.

I'm a long-time market bear, but I would caution that just because cash buyers are declining doesn't mean a crash is imminent. It would be fantastic for me personally if prices crashed in the next 45 days, even, but I'm not holding my breath.

Within a 2-3 year time horizon, I think it tapers, barring some major external factor like a large jump in rates.

Plus not all cash buyers are equal - Blackstone group has a very different view of the market (and opportunity cost) than a mom n' pop flipping operation.

[pdwpdx]

I would think that even if home prices did drop, they wouldn't drop far because then more people who can't afford now would try get into the market and either stop the drop or push prices back up again. Or is that faulty logic?

[VTHokieFan]

Originally Posted by AndyAMG

I also read recently, couldn't find it again. Portland has the lowest percentage of cash buyers anywhere in the US at 21% and falling. In 2014 it was 28%. To me that says this thing is about to crash. Cash buyers are now finding the market overpriced.

Many have assumed California and cash buyers are propping up the market but at 21% and falling it is quite obvious people are now most definitely being forced to buy homes they can afford in theory but not in practice.

Found it, o-live, of course.

All-cash home sales slightly down in Portland area, report finds | OregonLive.com

Could you clarify "cash-buyer?" I can't seem to find an exact definition. I was told I was a cash buyer because I had a good down-payment, a mortgage preapproval, and my purchasing the home was absolutely not conditioned on selling my current home since I had previously rented. But I've seen other definitions where cash literally means cash.

[Discovery1]

Originally Posted by AndyAMG

If you buy now you will kick yourself. Wait 3 years. This housing market is about to crash hard. There is no way anyone should be buying a $270-325k house on 55k year in a state where 22-25% of your income is gone before you see it.

We talked about this in another thread about how lenders are now allowing people to purchase homes up to 44% of their total gross income and how those in the RE/RE lending business have no scruples about allowing people to purchase homes they have no business buying, all they care about is money off the top of the deal. We are right back in 2005.

My wife makes about 52k but her paychecks are only 1650-1700 every two weeks. On a 270k house (which is a pretty terrible house right now.) You would spend almost your entire two week paycheck before you pay a single bill. In my opinion to be financially secure you should be able to put away at least $500/mo I guarantee that won't be possible.

If you buy right now you will be missing that 80k down for 10 years minimum I guarantee it. Prices took a severe tumble in 2008-2011. Anyone who tells you Portland houses don't lose value is full of crap. Of course they don't in the long term but to me life is too uncertain to know if you will be in a home for 10 years.

We had some friends from Beaverton who bought in 06 when he started working at Nike. He got the call of a lifetime to go work for Apple in SV. They had to sell their house at a loss. Sometimes you just get a deal you have to take.

People who bought in 2005 and 2006 are still underwater or just breaking even. In my opinion that is another reason we are seeing such high home prices. People who bought at the last peak are seeing this as their opportunity to escape Portland or maybe just a mortgage they no longer can afford.


My history of home buying has many cautionary tales. You have to stay longer than 10 years if you buy at the top.

When I bought my house in St. Johns for $175 in Feb 2012 The full mortgage amount financed was $120k When I sold in 2015 for $400k the mortgage principle was still 116K after 3 full years. I put 40-50k into it and sold it for $400k a few months ago. So you say wow that's great except for it isn't, its terrible. The homes values looked like this:
2003:$185 2005:$235 2007:$255k. Then I picked it up for $175k, So yes, it did crash and it was just as bad here as it was in the rest of the nation no matter what anyone says.
I did quite a bit of work and made it have curb appeal.
So lets say in 2013 the house was back at $255k
Since 2013 house prices have gone off the rails.
So what made my house worth 225k tops in 2013 and then sell for 400k 2 years later? A very screwed up RE market.

Some people have doubted my story. I won't show you my old house. but ill show you these two examples to show you it is real.
8211 N Swenson St, Portland, OR 97203 is For Sale | Zillow

ZEstimate: 225k asking price $395k. You would be absolutely insane to buy this home for $395k

This one is even more hilariously over priced. $450k in a crap neighborhood.

9331 N Bristol Ave, Portland, OR 97203 is For Sale | Zillow

It even tells you it sold in DEC 2014 for $170k!!!!! I can determine from pics they have a max of 50-70k into this house. Where does the extra $210k in value come in?

Unscrupulous lenders and RE professionals tricking dumb people into buying houses that are comically overpriced. Seriously, if you clicked on those links you should have laughed after analyzing the page.

The evidence has been presented, if anyone wants to buy a house 40-70% over what its true value is, be my guess.

I say wait 3 years.

I have been telling people for almost 2 months now that they need to watch the stock market starting from China. Some will say it has nothing to do with housing market....Well, think again.
The housing market in and around Portland already peaked this May that spilled over to the third week of June. Some investors cashed out while all the newspapers pumped it up along with your local RE agents. Since then, inventory is building up fast and it started to stay longer to sell. By November at the latest the little guys say mom and pop will see their home value going down when they read the news. My projection is that Portland housing market will be in the red 25%-30% by 2017.

I think you sold your house at the very peak.