Portland Couple Earning $250K Refuse To Become House Poor Amid Soaring Prices and Mortgage Rates
As the housing market continues to squeeze even high earners, a Portland couple making $250,000 a year has made the tough decision to delay their dream of homeownership. The Graves family—Laura and Samuel, both 36 years old with two young children—are grappling with a harsh reality that is becoming increasingly common across America: even substantial incomes aren’t enough to comfortably buy a home in many cities.
The average U.S. home value is currently $362,481, marking a 3.3% increase from the previous year, according to Zillow. However, Portland’s housing market tells a different story, with an average home value soaring to $538,294—significantly above the national average and essentially flat compared to a year ago. This hefty price tag, coupled with the highest mortgage rates seen in years, has left the Graves family in a financial bind. Despite their impressive earnings, they find themselves priced out of the city’s housing market.
The Graves’ situation was highlighted in a recent Business Insider story, shedding light on their decision to remain in a Portland apartment rather than overextend themselves by purchasing a home. Their dilemma is one that resonates with many Americans facing inflated home prices and steep mortgage rates. For Laura and Samuel, the choice to wait is about more than just money—it’s about avoiding the financial trap of becoming “house poor,” a term used to describe homeowners whose monthly income is consumed by mortgage payments and related costs, leaving little for other essential expenses.
The Graves family is taking a cautious approach to homeownership, aiming to limit their housing costs to no more than 30% of their $11,000 monthly take-home pay. Unfortunately, most of the homes within their desired area would require them to allocate around 50% of their income to housing expenses—far beyond their comfort zone. Their decision to wait for a market cooldown, rather than rush into a purchase, underscores a broader economic challenge: even for those with significant incomes, the dream of homeownership is increasingly elusive.
Conventional financial wisdom advises keeping housing expenses below 30% of take-home pay to avoid overextending oneself financially. However, with the current state of the housing market, this guideline has become difficult to adhere to, even for high earners like the Graves. Beyond the immediate risk of struggling with mortgage payments, overspending on housing can have long-term consequences, such as underfunded retirement accounts or insufficient savings for a child’s college education.
Additionally, the emotional and lifestyle costs of being house poor can be significant. Sacrificing family vacations, foregoing hobbies, or missing out on life experiences because of hefty mortgage payments are real concerns. For the Graves, maintaining a balanced lifestyle is just as important as building equity, which is why they’re holding off on buying a home for now.
The current housing crisis is exacerbated by elevated mortgage rates. As of August 15, 2024, the average 30-year mortgage rate was 6.49%, a sharp contrast to the 3.6% rate from August 2019. This difference significantly impacts monthly payments. For example, on a $362,481 home with a 20% down payment, a 30-year mortgage at 6.49% results in a monthly payment of $1,827. If the rate were 3.6%, the payment would drop to $1,318—a difference of over $500 per month.
For those in high-cost markets like Portland, where home values far exceed the national average, these elevated rates make it even harder to stay within the 30% income threshold for housing expenses. As a result, the Graves and many others are choosing to wait, hoping that either home prices will decrease or interest rates will stabilize at more affordable levels.
Some might argue that the couple should buy now and refinance later if rates drop. However, this strategy is fraught with risks. There’s no guarantee that interest rates will decrease anytime soon, and even if they do, qualifying for a refinance isn’t a given. Should the Graves stretch their finances to buy a home now, they could find themselves in financial trouble, damaging their credit and making it impossible to refinance later.
Ultimately, the Graves’ decision to sit out the current housing market reflects a growing sentiment among Americans. Despite earning what many would consider an enviable income, they refuse to compromise their financial stability by jumping into a precarious home purchase. Their story is a sobering reminder that in today’s housing market, even the well-off are feeling the pinch, and waiting might be the smartest move of all.
