The comments from my August Case Shiller post is the root of today’s post about Portland housing affordability. The basic question: is Portland (and has it been) affordable? According to the Case Shiller report, Portland housing prices have dropped to July 2005 prices. Meanwhile, the Affordability Index has hit about the same level as September 2004 (note that Case Shiller and RMLS have different definitions of “Portland Metro.” July’s issue of RMLS Market Action was the last month to include the affordability graph.
The National Association of Realtors (NAR) reports their Housing Affordability Index monthly. September’s report show the West’s Index is 148.2 which is about the same as Portland (Midwest is 221.5). The report is newer than the graph below but provides some measure of comparison.
I don’t think the graphs can answer the question though- they serve as a yardstick. It’s no different than the “Buy Now” concept. For some, it is a great time to buy. Affordability is equally subjective and individualized. Most lenders will impose a debt to income ratio of 45% (some may not). If you’ve got other debt such as car, credit card, student loan payments those all count against what you can actually afford in housing. We’re also seeing more and more people choosing to take on less than what they can afford. Less debt = less risk (and hopefully more savings).