I have no doubt that in the long run that is true to some extent.
The study cited indicates that at the national level housing filters down at a rate of about 1.9% per year so that after 50 years a household who earned 60% less than the original household would be able to afford that unit.
I put together an Excel file HERE and embedded below that shows my calculations showing how many years it would take for a lower income household to afford a market rate unit if the filtering rate was 1.9% a year. (The filtering rate in the study is actually 1/2% lower in higher house price appreciating markets like the west coast),
As a base/market rent I used $1,662, equivalent to the current 2 BR affordable PDX rent at 100% of MFI.
I calculate that it would take
- 13 years for the unit to be affordable to a family with income of 80% of the original market based income
- 28 years for the unit to be affordable to a family with income of 60% of the original market based income
- 37 years for the unit to be affordable to a family with income of 50% of the original market based income
[Those years change to 17, 38, and 50 years if a 1.4% filtering rate is used--see second worksheet].
I welcome any comments or alternative spreadsheets showing a different view of how long it would take to a market rate filtered unit to be affordable to a family at 80%, 60% and 50% of the original market based qualifying income.
Originally created and posted on the Oregon Housing Blog.