Housing Filtering Example: Would it Take 28 Years to Make New Market Rate Unit Affordable at 60% Of the Original Qualifying Income (100% MFI)?

Recent stories like this have suggested that the absence of high end housing supply has a negative impact on affordability for lower income renters.  The study HERE is one of the citations used in these stories.

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

1. 13 years for the unit to be affordable to a family with income of 80% of the original market based income 
2. 28 years for the unit to be affordable to a family with income of 60% of the original market based income 
3. 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.