A Record Number of Oregonians Have Jobs

One question I often get asked is: “How do people afford houses these days?”

And it’s a good question. Three years ago, someone could buy an entry-level home for about $400,000 with an interest rate around 3%. With a 5% down payment, that total monthly payment would be in the neighborhood of $2,100.

Today, that same home is about $430,000 and interest rates are closer to 7.5% without a rate buydown (an excellent topic for another time). Again, with a 5% down payment, that payment will be over $3,300 per month. That’s an increase of almost 60 percent!

It’s no wonder that most people think we’re in a housing bubble. Prices have to come down at some point…right?

Well, not really.

Recently, Oregon’s Office of Economic Analysis released a report about the record number of Oregonians working. Despite the higher interest rates, companies are continuing to hire employees, which is a good thing! But there is another side to this story.

One reason more Oregonians are working is because they are being forced to work. It is becoming harder and harder for families to survive on a single income, so many stay-at-home parents are needing to find work in order to make ends meet.

So the answer to the question: “How do people afford houses these days?” is that households need to make at least $100,000 per year to buy the median-priced home. Hence, more people are getting jobs to bring in that income. If you’re interested in the numbers, I did a detailed breakdown on my YouTube channel.

So, what about home prices? Will they ever come down?

Keep in mind that housing is all about supply and demand. Right now, there aren’t enough houses for sale for everyone who wants one. Builders are struggling to make a profit between interest rates, permitting, labor costs, and material costs, so not enough homes are being built. At the same time, no one wants to sell their home when they have a 3-4% interest rate. Meanwhile, the largest number of first-time homebuyers in history are looking to buy their first home.

If it weren’t for interest rates being so high, we would be seeing home prices increasing at probably 10% per year (just my guess), so it’s unlikely we will see prices drop by very much, if at all. Again, this is a topic for another time but I’m happy to answer questions if you have them!

At the end of the day, it’s good that people who need work are able to find it, but it does keep the home prices from coming down as more people can afford the higher payments.

If you are thinking about buying or selling, reach out to us! You can contact all team members at Team@thejoyfulrobertsgroup.com or reach out here.