Corrected Post: Portland Metro Home Affordability, 1980, 1990, 2000, 2010.

Earlier this week I did a post HERE about increased Portland Metro home affordability in 2010 compared to 1980 and 1990. 

A thoughtful and careful reader pointed out that the 2010 MFI in my original table in that post was less than the 2010 MFI.

I went back and discovered that I had used a City of Portland and NOT Portland metro MFI for 2010 and have correctly inserted the Portland metro MFI for 2010 in the revised table.

I also went back and found another error (groan). I entered $26,705 instead of the correct $36,705 for the 1990 Portland Metro MFI. This has also been corrected.

The corrected table shows that the median price home with an 80% mortgage in 2010 was MORE affordable than in 1980, 1990, AND in 2000. (I had previously erroneously said that there had been a minor loss in affordability from 2000-2010).

According to the revised data, in 2010 a Portland metro family at median family income would spend 17.2% of their income for a 80% mortgage on a median sales price home; that is down from 21.1% of MFI in 2000,18.5% in 1990, and less than half of the 41.5% of MFI required in 1980.

I have posted the corrected table HERE [same file location as earlier file], and deleted all text in the prior post.

I regret the errors but am very pleased to have readers that keep me on my toes and take the time to report on things that just don't seem right. 

I have copied the methodology and notes from my earlier post below: 

Methodology

First I found a table with the 30 year fixed interest mortgage rate history from Freddie Mac HERE.  Then I found a Portland Metro Council table HERE that included the Portland metro SFR selling price (excluding Clark County) through 2009.  Making the modest assumption that home prices have declined by 10% since 2009 I calculated a projected Portland metro median SFR selling price in 2010 at $222,300. 

Using 80% of this SFR selling price, and the average 30 year fixed mortgage interest rate for that year, I was able to calculate mortgage payments for the four time periods. 

I then found the Portland MSA Median Family Income from Census data.  To calculate affordability I then divided the Median Family Income by the annual mortgage payments.

Notes:

1. No attempt was made to add taxes and insurance; while their has clearly been some increase the impact of property tax limitations moderated that increase and clearly the rate of property tax increase is far less than the increase in median family incomes.
2. Median family income used  is from 1980, 1990, and 2000 census data and NOT from HUD median family income tables. [I couldn't find 1980 HUD median family income]. 
3. Because median family income data included the entire Portland metro area, and SFR selling price was only for Portland Metro council jurisdiction there could be some distortion in the mortgage payment and affordability ratios.  If these areas outside of Metro's jurisdiction had lower SFR selling prices, this would increase affordability.
4. I am interested if others have an alternative take on the data OR better data sources, so feel free to add a comment or email me. 

Originally created and posted on the Oregon Housing Blog.