New Economic Forecast: Home Price Increases Continue to Outpace Wage Increases, Gap Between Qualifying and Actual Incomes Grow.

Readers may recall my earlier post HERE showing the projected impacts on home purchase affordability using the Feb. 2017 Oregon Economic Forecast data for wage increases and home price increases. 

With the recently released August Economic Forecast update I plugged in the new projections and they worsen the affordability outlook from my prior analysis.   I have pasted below the updated analysis and the earlier analysis so you can see the differences. 

The main take away is that the revised forecast has bumped the 2022 gap between projected income and required income to qualify for an 80% loan from $7,500 to $9,600. The downpayment required also increases from $93,600 to $94,600.

Note also that the 2018 median sales price for Portland is projected at $380,000. The July 2017 actual median sales price already exceeds that at $395,000 and is $378,000 for the year to date. So, barring a price drop or no increase in home prices the gap between income and sales prices will exceed even the updated projection for 2018. 

Note ALSO that both projections assume a 20% down payment. IF the down payment % is less [and most down payments ARE less than 20%) this means that required income also increases (as the loan amount increases) and gap between projected income and qualifying income grows even larger. 

The current projection:

The earlier projection:

Originally created and posted on the Oregon Housing Blog.