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  ECONOMY   Real Estate  

Story by Amanda Arden - Story Source
Published on Wednesday March 17, 2021 - 4:42 AM
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PORTLAND, Ore. (KOIN) — Home prices in Oregon have risen steadily over the last five years, but an economist says the state's residential real estate market actually became more affordable amid the pandemic.

In early March, Damon Runberg, an economist with the Oregon Employment Department, released a housing affordability index he developed looking at the monthly mortgage of the average house as a share of the average wage in certain locations. What the index shows is that homeownership was more affordable in 2020 compared to 2019.

"I really wanted to sort of develop more of a housing affordability index that was a little more holistic than that and taking into account sort of the other variables that impact affordability in a particular place in time," Runberg explained.

He said a lot of people can look at the cost of a home and assume they can't afford it. However, when they actually consider how much they'll save with a low interest rate and if they can make mortgage payments with their current wage, they might be able to afford something at a much higher cost than they initially thought.

What really made 2020 an incredible time to buy a home for some people were the historically low interest rates. Runberg said that a 1% drop in interest rate equates to saving about 10% on the cost of a home.

With this in mind, many people were willing to pay higher prices for homes in competitive markets and felt they could still afford their monthly payments.