Friday, February 24, 2017

Rising Interest Rates, High Home Prices Will Keep Portland Renting in 2017

Reports from CoStar, the Portland Tribune, and the Portland Business Journal this week indicate that a variety of forces are likely to keep Portland residents renting. CoStar's analysis of the effect of rising interest rates suggests that an increase in the cost of borrowing could cause many households to hold off on buying. In December, the Federal Reserve indicated it would raise rates three times in 2017, and has indicated that the next increase could be fairly soon.

Meanwhile Windermere Real Estate's chief economist, Matthew Gardner, believes that while first time home buyers may attempt to enter the market in 2017, the supply of owner-occupied homes in the Portland metro area is so low that there may be nothing for them to buy. In his Portland Business Journal article he states that in Multnomah county alone, 7,493 owner occupied housing units are needed. Surrounding counties are similarly low on supply. He forecasts that Portland's above-average price growth will not be slowing anytime soon, due to lack of inventory.

Finally, the Portland Tribune reported this week that according to HSH.com, the average buyer in Portland needs a salary of $70,000 to afford a home. That is an increase of 7.5% from one year ago. The median home price in Portland is $354,700, and the median monthly mortgage payment is $1,654. The 2015 median annual income in Portland was $63,850.