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Owning home getting harder for minorities

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Wealth gap growth in the Portland region as affordable homes within the urban growth boundary disappear.

COURTESY ECONORTHWEST/PORTLAND HOUSING CENTER - One of several maps producted by ECONorthwest and the Portland House Center showing how affordable homes disappearing. The lighter colors show where homes will be affordable to those who can afford a 20 percent down payment in three years.Rent increases are taking a well-recognized toll on Portland's minority communities, pushing them out of their traditional neighborhoods to the edges of the region. Increasing home prices also are disproportionately hurting minorities by further reducing their chances to build wealth.

According to Portland State University Urban Studies Professor Lisa Bates, the wealth gap between white and African-American families is 20-to-1 — far greater than the wage gap. She blames much of that on the longtime inability of African-American families to buy homes.

"Owning a home is the easiest way to access housing stability and build wealth," Bates told the City of Club of Portland last Friday.

Bates spoke as part of a Friday Forum series titled "We Call This Home: Talking About Wealth, Home Ownership and Race." The March 10 presentation focused on how Portland is becoming increasingly unaffordable to those wishing to buy a home, but especially for minorities who have even more trouble saving up for a 20 percent down payment. Although some mortgages only require 5 percent down, their monthly payments are higher because the principal is larger.

"That forces those families who can only afford 5 percent down to search for lower-priced homes, where the competition is the greatest," Bates said at the presentation, called "Pushed Out: No Affordable Homes in Portland."

Sylvie Jensen, a kindergarten teacher who recently bought her first house, also spoke. She was helped by the Portland Housing Center, a nonprofit organization that matched the $2,000 she saved for a down payment and provided other assistance. Jensen said she was desperate to buy after experiencing repeated rent increases, but bought in Beaverton because she could not afford anything in Portland.

"If trends don't change, a family of four earning the region's median income of $73,000 a year will not be able to afford a home in Portland by 2020," said Lorelei Juntunen, partner at the economic consulting firm EcoNorthwest. It recently partnered with the Portland Housing Center on an analysis of Portland homeownership trends.

The analysis was summarized in a series of maps based on U.S. Census and real estate data that show where families earning the median income can afford to buy a home within the urban growth boundary set by the Metro regional government. The statistics start in 2001 and are projected to 2020, just three years from now.

Affordable housing advocates argue that homes are not affordable if monthly payments cost more than 30 percent of family income. By that standard, most of the region within the UGB already was unaffordable by 2001 to familes who could only afford a 5 percent down payment.

Only large parts of East Portland, North Portland and east Multnomah County included many homes that cost less than 30 percent of the median family income at that time. A few affordable homes also could be found in small portions of Washington and Clackamas counties.

By 2015, the most recent year for which information is available, the areas where many affordable homes could be found had shrunk to much smaller areas of East Portland, North Portland and east Multnomah County. Homes in about one-third of the area within the UGB cost more than 40 percent of the median family income.

And by 2020, ECONorthwest projects that virtually no families earning the median income will be able to buy an affordable home within the UGB. In fact, homes in roughly half the area within the UGB will cost 50 percent or more of the median family income to buy.

According to the Portland Housing Center, the run-up in home prices has hit minority households especially hard because they have historically earned less than the median family income — much less, in many cases. For most African-American and Latino families, owning a home in the Portland region already is out of reach, and the situation will be even worse by 2020.

The situation is a little brighter for those families that can afford a 20 percent down payment. For them, affordable homes will still be found in parts of east Multnomah, Washington and Clackamas counties in 2020.

Find out more

• To see the historical housing affordability maps within the urban growth boundary, visit: tinyurl.com/gnkbnzw.

• The next discussion in the City Club series is set for May 12 and titled, "Racial Wealth Gap: Hidden Costs/Visible Solutions."