A millennial couple with two children is struggling to find an ideal home in Portland, Oregon, despite earning a quarter-million dollars a year combined.
Laura and Samuel Graves, both 36, are raising their kids in an apartment in a suburb of the city but have been looking for a house for the past three years, Business Insider reported.
At first glance, their financial situation makes it seem obvious that they could afford a house. Laura Graves works as a financial analyst and Samuel is an electrician, combining to pull in $250,000 last year.
But most of the houses they are interested in would command monthly mortgage payments of at least $5,000 – almost half of their monthly take-home income of $11,000.
Experts say it’s generally best to spend no more than 28 percent of your income on housing, a rule of thumb that’s becoming harder and harder to follow as home prices and mortgage rates have been soaring for the past four years.
‘We refuse to become “house-poor” and, like many others, are choosing to sit it out until the housing market is reasonable again,’ Laura Graves told Business Insider, referencing the term that means a home purchase has left someone struggling financially.
Until the married couple can find a family-friendly home that has monthly payments closer to $3,000 to $3,500, they’ll continue renting their $2,700-a-month two-bedroom apartment.
There are signs pointing to the U.S. housing market finally cooling after years of record appreciation and high borrowing costs.
Prices do appear to be coming down in certain areas, especially Florida, thanks to a number of factors including declining demand.
But unlike much of Florida, where home prices are also tanking because of natural disaster fears and skyrocketing insurance costs, homes in Portland generally cost the same as they did a year ago, according to Zillow data.
Houses don’t come cheap in Portland, as it was rated the 15th-most-expensive housing market in the country by a SmartAsset analysis in June.
The Graves family could ultimately be served by recent economic headwinds, which gave way to mortgage rates dropping to their lowest points in more than a year.
The Federal Reserve is also expected to initiate the first rate cut in more than four years at its September meeting, a move that would allow banks to offer cheaper home and auto loans.
Even so, mortgage rates remain elevated, with the 30-year fixed rate sitting at 6.47 percent as of August 8.
At the peak of the suburban house buying frenzy in 2020, rates were often below 3 percent.
The Graves said they don’t want to move out of Portland, despite knowing that housing is much cheaper in other parts of the country.
‘We actually tried uprooting the kids to a more affordable town and found ourselves less happy in the end,’ Laura Graves said.
That more affordable town was Spokane, Washington, where the couple grew up.
They lived in Portland for six years before deciding to move back to Spokane in 2018, where they bought a home with a monthly mortgage of $2,200.
Laura Graves said she and her husband began missing their work back in Portland, so when her old supervisor offered to double her paycheck if she moved back, the decision was easy.
They sold their home in Spokane and relocated back to the city with their children, who are 7 and 9 years old.
When they first moved back, Laura Graves said they were a ‘little picky’ in their home search because they didn’t want to overpay for something they didn’t love.
Facing sky-high prices and climbing interest rate., they’ve opted to save their money for years, crossing their fingers that they would find their dream home.
Setting aside money for that has come at the expense of their retirement accounts, into which the couple is only putting 3 percent of their yearly income.
They are also being confronted with the reality that there is a chronic housing shortage in their chosen city.
According to a housing needs analysis from the city, Portland will need 120,000 new homes built by 2045, which necessitates 5,000 units being constructed every year until then.
Unless there is a major turnaround, it’s unlikely the city will reach this goal, since builders were only able to produce 1,483 new units in 2023.
However, Laura Graves said she and her husband will continue monitoring the market to find a home they like that’s in their budget.
‘Our children have begun talking about how they want a house so badly and their own rooms,’ she said. ‘We’ll never get these years back. By the time we buy, we won’t even need room for a play set.’