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Worst home ownership since 1965 — hits Oregon

October 3, 2016

home-foreclosureBy Taxpayer Foundation of Oregon,

It’s not your imagination, Portland is increasingly becoming a city of renters.

The U.S. Homeownership rate in the second quarter of 2016 fell to its lowest level since 1965 – 62.9%.

Economists and pundits are split on the reasons why. Some argue that it is a lingering effect of the 2008 economic collapse, high student loan payments and increased debt for young people, and skyrocketing home prices. Others say these have no effect.

According to research published by the Federal Reserve Bank of Cleveland, the monthly debt burden for borrowers between the ages of 20 and 30 in the second quarter of 2015 was $351 a month, and three quarters of all 20- to 30-year-old borrowers have student loan payments of $400 or less. The study argues that as long as the debtor’s extra monthly income ($750) from having a college degree is higher than their monthly payments, then they are financially better off.
That’s not the real story. Mortgage lenders like a maximum debt to income ratio of 36%. That means that for every $1000 of income, no more than $360 goes towards credit card bills, car loans, child support, student loans and mortgage payments and other housing expenses.

An average Portland household with an income of $60,000 and no debt can qualify for a $303,000 home (accounting for taxes and insurance). The same household with $350 a month in consumer debt can purchase a $282,000 home, and the same household with $750 a month combined consumer and student loan debt can purchase a $239,000 home.

Seen many $239,000 homes in Portland lately?

The median Portland home price in August, 2016 was $353,000, and the average $400,100.

The income/affordability situation is similar in most of the U.S.

The argument that high student loan payments, increased debt for young people, and skyrocketing home prices have little to nothing to do with home ownership rates does not stand up.

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Discuss this article

Jan October 3, 2016

Home ownership makes sense if one is going to work for a company for the next thirty years. Those days are over, today’s young workers will have many employers. Home ownership is an anchor that ties them down to a location. If the housing market tanks, they cannot sell their home in order to move to a new job.

Today’s worker’s need the flexibility to move to a new job market free of the anchor of home ownership. Home ownership is not all it is cracked up to be in today’s market.

Antiplanner October 3, 2016

This article doesn’t say, but the Census Bureau says the homeownership rate in Oregon in the second quarter of 2016 was 60.9 percent. That appears to be the lowest it has been since before 1950. (It was 65.3 percent in 1950, 55.4 percent in 1940.) By contrast, there are several states today with homeownership rates over 72 percent, and one whose rate is over 75 percent. These states don’t have urban-growth boundaries.

Bob Clark October 4, 2016

I have a brainstorming like idea. Over 50% of the state is locked up dormant like in government ownership (federal and state). I am thinking maybe a modern day homestead act where homeless people willing to use their own hands and follow directions from groups like Habit for Humanity, can get a new stake in this world using their own sweat equity. It’s a modern day version of our pioneer days, and we can still go to this well without much impact because the government ownership of large swaths of our land is pretty useless as is.

As for resulting spreading of population density, I’d rather help folks willing to help themselves than a global issue Oregon can’t much change if at all.

Well like I said it’s brainstorming….and there are no bad ideas in brainstorming.

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