I saw an eye-popping stat the other day: the median single-family, resale home price in 2023 for the San Jose, CA metro area (so, Silicon Valley basically) was $1.765 million, based on preliminary estimates. This was the highest for any metro in the nation, and by a lot– it beat the rest of the Bay Area by half a million bucks. I would surmise that if you asked the average California expat living in Portland (like myself) why they made the move, the answer would more-or-less be two fingers pointed at the above numbers. You decide which fingers.
The Portland metro (which is defined as Portland-Vancouver-Hillsboro, OR-WA, for these purposes) ended 2023 with a median home sale price of $584,800. That’s no small sum, compared to the national median of $394,600. That is a small sum compared to just about any other major city on the West Coast. Where did the rest of our neighbors land? It’s almost comical:
I know what the argument is: incomes are much higher in California, and therefore can support the higher housing costs. It’s only true to an extent, and not a big one. Sure, wages are higher and there are plenty of people bringing in those big Apple or Google bucks. Not everyone is though, and overall affordability is much worse for the typical family. The National Association of Realtors has what’s called a Housing Affordability Index, which measures exactly that— can a typical household afford a typical house. As it’s an index it’s based on 100, meaning if you come in at 100 you have exactly the amount of income to afford that median-priced home, no more no less. 120 means you have 120% of the income needed, and 50 means you have half of it. The most recent data they have is from 2022, and, well:
No surprise, but San Jose ranks as the least-affordable metro in the nation by this metric. Portland comes in at 82.8, meaning the typical household makes 82.8% of what’s needed to buy a median-priced home with 20% down. If you’re looking for comparable cities to ours, Denver came in at 79.9 while Boise got an 84.
It’s easy to point to Portland’s affordability issues and think the sky is falling. It is not a cheap place to live, and the cost of everything has gone up enough to push a lot of people out. Having seen the affordability issues in California firsthand though, I see the perspective. Portland is still far more affordable than every West Coast city except Sacramento (which isn’t on the coast but neither is Portland, semantics, yada yada).
The opportunity is there for folks coming from the ultra-expensive markets to dramatically improve their housing prospects, and the opportunity is there for sellers here to make a killing by selling a house to them. Obviously there are challenges for those homegrown buyers not arriving with big California salaries and savings, but those challenges are– relatively speaking– nowhere near the challenge faced by those along the rest of the West Coast. So is the glass half-empty or half-full? Perhaps the contents of the glass are equally distributed between full and empty.
