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Is Housing Affordability A Problem Where You Live?


Is Housing Affordability A Problem Where You Live?Is housing affordability a problem where you live? It’s a big problem in Portland. Our homeless population is growing and becoming increasingly visible. Portland is not alone, though. Many West Coast cities are experiencing an explosion in homelessness. A lot of this has to do with housing affordability. The West Coast has done very well economically over the last decade. Housing prices and rents have increased tremendously as a result. Well compensated workers can afford nice houses and apartments. However, low wage workers and people on fixed income haven’t been able to keep up.  Some people who were able to scrape by previously can’t do it anymore. They become homeless and the problem continues to worsen.

Homelessness is getting worse

From personal experience, I see that our homelessness problem has been growing over the years. I lived in Portland from 1997 to 2000 and I don’t remember any tents on the sidewalk. There were homeless people, but they were not as visible. In 2000, we moved to the suburb so I could be closer to work.

We didn’t really like driving everywhere so we moved back to the city in 2007 and turned our house into a rental. Ten years ago, the homeless problem still wasn’t that bad. There are areas in downtown where homeless people congregate, near free services. There are always a lot of scruffy looking people around the central library. Chinatown and certain parks have a lot of homeless people hanging around. However, we didn’t really see them around our condo. We’re on the southern side of downtown which is a long walk from various social services.

The homeless problem got worse gradually. Tents sprouted along sidewalks, under overpasses, and pretty much any available green space. The city sweeps up these camps occasionally and they move around. The homeless propagated out of the core downtown area and spread outward. There are tents in many neighborhoods now. Parks are overrun with homeless people and you can see them sleeping everywhere. Out of state visitors are surprised by the prevalence of problem. It doesn’t feel like the same country as where they’re from. Homelessness is very visible here.

*Chart from the Oregonian. They had a pretty good report on our homeless crisis (Jan. 2015).

Is housing affordability a problem where you live?

Unfortunately, the homelessness/housing affordability problem in Portland probably will worsen. I don’t think we’ve hit rock bottom yet. It also seems to be a growing problem in many cities on the West Coast. I read that it’s pretty bad in LA, San Francisco, Seattle, Tacoma, Eugene, and other cities of all sizes. Homelessness is more prevalent on the West Coast because the weather is milder. Maybe it isn’t as bad in other areas of the country?

Recently, I got into a minor argument on Twitter. A prominent blogger argued that it’s best to ignore the news and look at the well-being index instead. Some locations are going in the crapper, but the overall well-being index has improved in recent years. The news will focus on problems and amplify them because that’s what sells. Avoid the news and don’t worry about it. This strategy works very well if you live in small town Colorado, but it’s harder to ignore the homelessness when you live in bigger cities and are confronted by panhandlers daily.

So that’s why I want to get your input and see if there is a housing affordability problem where you live. Generally, it is an affordability problem if you’re spending more than 30% of your income on housing. If there are a significant homeless population and panhandlers in your town, then there is some kind of problem.

Is housing affordability a problem where you live?

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This is a very simple poll. Please elaborate in the comment section if you have more to say. Housing affordability is a big issue. It benefits some of us, but it hurts many too.

Well-being index

FYI, here is the latest well-being improvement map from Gallup. Last year’s state indexes don’t look too great. For the first time, zero states improved from the previous year.

Am I part of the problem?

I think housing affordability is a growing problem in the US, no matter where you live. You might not see a problem now, but it’s coming down the pipeline. Why?

We have 2 rentals in Portland, a condo and a duplex. I charge a little below market rate and my tenants are doing fine financially. Investing in rental properties is a great way to build wealth. It’s a proven system. However, I can’t invest in local real estate anymore. The housing price is too high here. I’m sure there are deals to be had, but I don’t know how to find them. The professionals probably scooped these deals up before they hit the market. Who knows…

I still believe in real estate investing so I’m looking further. There are many markets where real estate is still a great investment. Housing in non-coastal states is still very affordable. That’s why I’m investing more in real estate crowdfunding. A local company will buy a cheap apartment, fix it up, raise the rent, and sell it a few years later. We have seen this over and over again in Portland. Poorer people get displaced and they have to find another cheap place to live. This kind of investment probably exacerbates the housing affordability issue. Even if your city is affordable now, it will probably worsen in the future. Entrepreneurs and investors will follow the money. That’s capitalism.

Micro apartments

You’ve seen tiny homes, but have you seen micro apartments? This is one answer to the housing affordability problem on the West Coast. Check out this micro apartment in Seattle.

micro apartment

This 175 sq ft apartment rents for about $1,000/month. This is pretty neat. It’s almost like a hotel room. There is a nice common kitchen, onsite laundry, and bike storage. These micro apartments are usually located in areas with very good Walk score. There are many amenities nearby and renters can spend a lot of time away from their tiny home.

I think West Coast cities should encourage more of these micro apartments. It’s one way to bring the cost of housing down.

Should you care?

Anyway, I hope I didn’t ruin your Monday. If you’re reading this, you probably have a job to go to and a decent place to live. No matter how bad your job is, it’s better than being homeless, right?

What do you think about housing affordability? Is it a real problem or just fake news? Should you care about homelessness if you don’t see it in your town?

Sign up with RealtyShares to browse the current projects and see if real estate crowdfunding is a good match for you. Capitalism, right?

Image credit: Zoku Amsterdam

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Joe started Retire by 40 in 2010 to figure out how to retire early. He spent 16 years working in computer design and enjoyed the technical work immensely. However, the job became too stressful and Joe retired from his engineering career to become a stay-at-home dad/blogger at 38. Today, he blogs about financial independence, early retirement, investing, and living a frugal lifestyle.

Passive income is the key to early retirement. This year, Joe is increasing his investment in real estate with CrowdStreet. He can invest in projects across the U.S. and diversify his real estate portfolio. There are many interesting projects available so sign up and check them out.

Joe also highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help DIY investors analyze their portfolio and plan for retirement.
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{ 102 comments… add one }
  • The FIminator June 26, 2018, 7:40 pm

    Its become an issue in New Zealand in the last 5-6 years. On the face of it, houses in NZ are quite cheap in comparison to the rest of the world. The challenge is that wages are also..well..cheap! So when you look at income to house price ratio, it gets a bit silly. Auckland is the main city where the ratio is over 9 times the household income but the average around the country is between 5-6 times your income, which is not over-the-top.

  • Keith June 4, 2018, 5:51 pm

    The housing situation is nearly purely a problem of government overregulation. I am in Los Angeles. There is plenty of open space – just not in downtown Los Angeles. There is so much space in the inland Empire, Ventura, etc. And the government makes it too hard to build. If you want to live in downtown Los Angeles (or San Francisco, or Manhattan, or Seattle or…) yes it will be very expensive. So if you can’t afford to live in an expensive area live in a less expensive area. Homelessness I do not believe is a symptom of society’s callusness. Until recently, the vast majority of homelessness was become of substance abuse or psychiatric disease. The government provides plenty of support for food and housing, and housing is downright inexpensive if you are far from the major cities. I’m from Michigan and you can purchase a home for a song. I live in Los Angeles and it is a fortune to live here! I’d move if my job didn’t keep me here. I guess I just don’t understand the problem. There is plenty of inexpensive housing in this country. Just not in San Francisco or Manhattan.

    • retirebyforty June 5, 2018, 8:29 am

      The houses are still pretty cheap further out. My wife’s parents live in the desert and their houses are very affordable. It’s a long drive to LA, though. And there are still homeless people in those towns.
      Here in Portland, most homeless people have some kind of mental and/or substance abuse problem.

  • WTK June 1, 2018, 7:38 pm

    Hi RB40,

    The place which I currently reside, is of high cost in term of purchasing the property. That’s why I opt to rent rather than purchase the property. I think that it will be more appropriate to geo-arbitage into another country to make the money last longer. One possible country which I can think of, is Thailand.


  • Ms ZiYou May 29, 2018, 11:21 pm

    I’ve seen a few other London responses here, and I agree London itself has got very overpriced in the last 10 years, so the plateau/correction we have now is very much needed. Even outer London where I live is getting unaffordable for many, with small 2 bed terraces selling for over £300k and 3 bed semis now over £400k. These are doable with a good income and a substantial deposit, if you have the income and can save.

    Living in London is great fun, and you can make the numbers work if you make a good income; however, if you don’t you will struggle and would have a much better quality of life living outside the capital.

  • Reverse Engineer May 28, 2018, 2:30 pm

    As Shell stated, even relative backwaters like Sacramento are becoming expensive whether by rent or purchase. Homelessness exploded here during the Great Recession and never receded. Cities with any kind of decent economy are choking on their own success due to tremendous economic concentration.

    Unless your job absolutely requires it, I think the best solution for most folks is to simply avoid or move away from the bigger cities. Its a big country, and there are plenty of smaller towns in say, the midwest, where good quality housing can be had at a fraction of coastal prices. Academic studies already show that for the average worker, moving from a low cost to a high cost area is a net loss, despite higher pay. Time look far and wide.

  • Susan @ FI Ideas May 23, 2018, 2:16 pm

    I live in Stockton, California. It’s relatively affordable compared to the Bay Area. We’ve always had a lot of homeless people and it seems to be much larger. Recently my niece started looking for rentals and told me that there is almost nothing on Craigslist other than the apartments. Rents are growing really fast. I really cannot imagine how people manage to pay these rents or home prices. Low interest rates have encouraged people to bid up prices again, much like it happened in 2006.

  • FIRECracker May 23, 2018, 12:47 pm

    Housing affordability is definitely a problem in Toronto, just like it is in Vancouver. I think this is why the vote has swung all the way from the right or center to left (which reminds me, there’s an provincial election coming up–should be interesting). When the average detached home is $1.28 Million and the median family income $78,000, it just makes no sense. No wonder my co-worker almost died at his desk from all the crazy hours and stress of paying his massive mortgage. Maybe in the future people will become more location independent so that the population isn’t all concentrated in big cities and people won’t have to choose between their lives or paying the mortgage.

  • islandstyle May 23, 2018, 9:32 am

    Housing affordability is a big problem in Honolulu as is homelessness. I’m no expert, but it seems that housing prices here are partially inflated by foreign and outside buyers plus a constrained housing market. Current housing prices are unaffordable for most folks at local wages, even my doctor friends feel the struggle.

  • Shell May 23, 2018, 8:28 am

    I live in Sacramento and homelessness is a huge problem and only growing! The city is making it a priority to decrease the homeless population, but I am not sure how it will work. The number of homeless families is also on the rise and there is a school specifically for homeless children.
    The price to buy or rent in Sacramento is also rising very quickly. Many people move here from the Bay Area and they will commute to work everyday! That’s a very long commute with the horrific traffic. I am not sure what the answer is, but there is no doubt the number of homeless people is growing and so is the cost of housing.

  • Justin May 22, 2018, 11:54 am

    So far so good in Raleigh. I’m still seeing decent 1-3 BR apartments for $650-$1000. Lower end jobs like Aldi grocery store entry level pays $12/hr which is ~$2000/month. With a couple of kids, that salary plus the earned income credit would make the housing in this market affordable by the 30% of income definition. And that’s before consideration of any public housing assistance, food stamps, etc.

    • retirebyforty May 23, 2018, 8:50 pm

      That’s like Portland about 20 years ago. The cost of living increased a lot over that time.

  • Bernz JP May 22, 2018, 8:06 am

    I live in Illinois (west burbs) which was the most moved from state in 2017 and that’s not just because of the cold weather but also crime rate, political mess and high taxes. There will be housing problems everywhere and there’s no guarantee that a better place now will stay as good forever. A lot of the countries overseas are worse. The good news is that we always have a choice. I need to go somewhere warm though.

  • Dan K May 22, 2018, 7:10 am

    Living near urban areas and where the higher paying jobs are, the housing is not affordable and homelessness in creases. In a smaller town (where I live now), there is homelessness, but housing is affordable. I also feel that homelessness will always be a problem, whether housing is affordable or not.

  • The Poor Swiss May 22, 2018, 3:32 am

    Wow, I didn’t expect such decline in the United States.

    Here, in Switzerland, I think renting is affordable for most people. However, buying is not affordable for a lot of people because of the quite high cost of the houses and thus the very high down payment one has to make. And some cities and regions, such as Zurich, are becoming insanely expensive for housing.

    • jim May 22, 2018, 10:19 am

      I believe your incomes and rents are higher in Switzerland.

      In Portland for example the average rents are around $1200-1500 USD/month. Median family income is around $5600 USD/mo. But the minimum wage in Portland is about $1875 if you work full time.

    • jim May 22, 2018, 10:36 am

      You used the word “decline” there.

      The US has had homeless problems for a long time. Cuts in mental health institutions and spending over the past 50 years has worsened the problem.

      The national count in 2018 is actually 15% LOWER than it was 10 years ago.
      About 0.1-0.5% of the entire US population is homeless depending on which estimates you use. The problem is often purposefully hidden. By that I mean that the cities enforce laws that force the homeless out of public places so they aren’t seen. Portland and Seattle are liberal cities and don’t do that kind of thing and are generally more accommodating to the homeless.

      Homeless does include people living in shelters. Some places there are enough (or almost enough) shelter beds for the homeless people so you don’t see it much at all.

      As I pointed out above the actual count in Portland is not changed much in the past 10 years. Its just more visible with a bit more “unsheltered”. Portland only has enough beds for 60% of the homeless population.

  • Financial Brotha May 22, 2018, 12:36 am

    According to the BERACHA, HARDIN & JOHNSON BUY VS. RENT INDEX it appears that Portland is slightly in rent territory. This is true of both San Francisco, CA and Seattle, WA also west coast cities. https://business.fau.edu/departments/finance/real-estate-initiative/bhj-buy-vs-rent-index/bhj-data-and-graphs/

  • Financial Orchid May 21, 2018, 10:11 pm

    People take one way trips to the milder west coast as u pointed out . The visible homelessness is a result of mental illness, addiction, PTSD , or post war trauma,
    as most people of sound mind would not visibly show homelessness to the public. The latter more likely to hide homelessness by living in their vehicles, or more secluded places.

  • Darren @ Learn to Be Great May 21, 2018, 6:17 pm

    We just moved to the Chicago ‘burbs from Olympia, WA, where the schools were the best south of the Seattle area. Trying to find a place that’s comparable in a good school district here is pricey. Although the median house prices are about the same, the property taxes are about 2.5 times higher. Property taxes on our 2000 sq ft home in Olympia were $3700. They’re going to be nearly $10K here…!

  • Mr. ATM May 21, 2018, 3:00 pm

    Property tax worries me as well, even though our house is all paid for, the property tax seems to be going up and up every year. Thanks to the rising home prices. As for homeless situation, I feel our big cities are turning into huge homeless camps with walled mansions for the rich. Sad situation indeed!

  • Luis May 21, 2018, 2:23 pm

    Property taxes are taking a big chunk of change too! Even if you finish you paying for the house, you still have to pay too much in taxes. Social welfare programs I understand, but giving business and sports teams tax breaks and incentives for coming to town are just throwing good money away. I hope local governments become more frugal with tax revenues and stop subsidizing corporate activity.

  • Kelly May 21, 2018, 12:23 pm

    I live in Seattle and it’s like we are living a nightmare. The reason tax payers are so upset is the city councils irresponsible denial of the rampant drug problem and mental illness. They claim the problem is they all got laid off from Microsoft and we need to help them get housing in prime neighborhoods like Queen Anne and Capital Hill. Meanwhile the taxpayers safety is at risk. The homeless we have here are usually violent or on drugs. It’s very scary and upsetting right now and the only thing our leaders want to do is punish the employed and homeowners by taxing them to the city’s detriment.

  • jim May 21, 2018, 12:18 pm

    Housing affordability is a problem here yes. However I don’t believe that homlessness and housing affordability are really the same or directly related.

    The vast majority of the homless are unemployed. You can’t afford any housing when you’re unemployed. Further most are chronically homeless and most of those have drug and mental health problems. Only a small minority of the homeless are directly impacted by housing costs.

    I believe the Northwest specifically Portland, Seattle and Eugene have highly visible homeless populations because they are generally welcoming cities. Liberal government policies, free services, tolerance, mild climate etc all add up to allow for a growing homless population.
    There were actually MORE homeless people in Portland 6 years ago but they’ve become much more visible and a higher visibility problem. If you ask the random person they’d claim the problem is 2x as much now but its less. I can only assume its more visible because government policies allow it to be and if you allow it then it continues and grows.

    • jim May 21, 2018, 12:20 pm

      Homeless counts for Portland :

      2009 = 4145
      2011 = 4655
      2013 – 4441
      2015 – 3801
      2017 – 4177

      Full detailed report:

      Only 11.8% are employed.

    • retirebyforty May 21, 2018, 9:21 pm

      I think mental health is #1 and drugs #2. Housing affordability is probably #3. Once people lose their housing, then it’s really difficult to hold down a job. I read that many people are on disability or other fixed income. Those can’t keep up with the rising rent.
      I saw the homeless count. It’s strange, but homelessness is a lot more visible now. I think it just spread out all over. Before it was more concentrated in Old town.

      • jim May 22, 2018, 9:41 am

        There were the same number of homeless 8 years ago. The thing that has really changed is the visibility. I think visibility has increased massively in the past few years and I suspect thats really just because the homeless have been allowed/emboldened to pitch tents on any/every sidewalk or spot of grass they can access.

      • jim May 22, 2018, 10:11 am

        You’re also right about mental health and drugs being common problems.
        60% of homless have disabilities including mental health and drug abuse issues.

        “People who were unsheltered reported high rates of mental illness (44.8%), physical disabilities (38.0%), substance abuse disorders (37.5%) and chronic health conditions (26.3%)” There is overlap between those %’s with some people having multiple conditions.

        Also the # of people who are “unsheltered” homless actually did increase in every count from 2007 to 2015 so that is likely part of our increased visibility. But then in 2017 the number went down, I suspect because the city has started to address it.
        1/4 of the total unsheltered were homeless when they moved to Portland.

  • Laura May 21, 2018, 12:11 pm

    Yep (of course, live in Portland as well).

    One thing my husband and I noted as we drove past a half-dozen mixed-used buildings being built is that SO MANY new apartments in town are not family friendly. They are studio/1br/2br. What if you need 3-4 bedrooms? Like for us, we would probably need 3br because we have teens of each gender. And then there are the “slumlords” that don’t maintain properties and still charge a lot. A $20M judgement was won by a tenant recently against apartment owner/company in our area because of horrible maintenance that led to injury.

    • retirebyforty May 21, 2018, 9:16 pm

      Right. The new apartments downtown are tiny. You’d have to live further out if you need more space. Maybe rent a house.

  • Mr Green May 21, 2018, 11:36 am

    In Canada, Vancouver is the only big westcoast city so yes, there’s lots of homeless. When I was in Las Vegas many people there were telling me they moved to LV because it was much cheaper. My guess is the lack of cold weather there is another attraction.

    My mother’s rancher in a suburb of Vancouver is worth just over $1 million(Canadian dollars). 800 sq ft apartments in the same area are going for $700,000. It’s desperate times over here for a lot of people including renters.

    But if you owned a home here anytime before the decade then you’re laughing. It’s almost like winning the lottery.

    • retirebyforty May 21, 2018, 9:15 pm

      It sounds like SF, pretty crazy. I haven’t been to Vancouver in years. It’d fun to visit again someday. Probably changed quite a bit.

      • Mr Green May 22, 2018, 9:52 am

        If the last time you came was before the Olympics in 2010 then there’s been a lot of changes.

  • Jason Fieber May 21, 2018, 11:14 am


    Not a problem here in Chiang Mai, but I know that’s not in the spirit of the article (focusing on the US).

    I’m actually in the midst of apartment hunting right now. My SO thinks we can get a better value, but we’ll see. We have yet to find anything better (although there’s plenty that’s cheaper). She says I’m “overpaying” for this luxury apartment that’s located in the Nimman area (walkable, restaurants, coffee shops, coworking spaces, gyms, etc.) for $425/month. That would be a very strange concept in the States.. But it’s a different world over here.

    Best regards.

    • retirebyforty May 21, 2018, 9:13 pm

      It’s more visible in Bangkok. I saw people sleeping in the street last time I visited. Chiang Mai still looks okay.
      Good luck on your apartment hunt.

  • David Michael May 21, 2018, 9:56 am

    Eugene, Oregon, a small city of 160,000, is now coping with the problem of the homeless as well. There are officially about 1500 in our city limits, but the number is growing rapidly as the city builds small shelters of 160 sq feet. Most homeless live under bridges and along the river where the police periodically move them. The Willamette River Keepers (kayakers and canoeists) periodically clean the river areas. This year we find that the numbers of homeless have tripled over last year. Besides the needles, feces, trash left behind on clean-ups, the crime rates have increased so that some people are concerned about travel on the bike trails. It’s become a huge problem as the community tries to work out sensible solutions only to have more homeless move here from the larger cities like Seattle, SF, LA and San Diego. To be honest, I don’t have a solution but I am very concerned for future generations. That “Trickle down theory of wealth” presented by President Reagan never happened for most working people.
    His closing down of mental hospitals throughout the country, is one of the causes of the nationwide homeless problem.

    • Pennypincher May 21, 2018, 10:58 am

      David, you hit it right on the nail head. The closing down of mental institutions in the Reagan era was the start of all this growing problem. And how many decades ago was that? Just sayin’.

    • retirebyforty May 21, 2018, 9:11 pm

      We saw some when we visited last year. I think Salem and other smaller cities are having the same problem too.
      Our area has a lot more problem with property crime over the past 2 years. It’s an epidemic here in Portland.
      I don’t know how we can solve this either. It’s a difficult problem.
      Mental issue is probably the biggest cause of homelessness. I read that 45% of the homeless population has some kind of mental issue.
      Thanks for sharing..

  • David Michael May 21, 2018, 9:33 am

    Great post Joe. I agree that housing is a huge problem in the USA with emphasis on the west coast. I remember years ago in San Francisco where my daughter had an apartment, we had to step over people sleeping on the sidewalks. In general however, the homeless problem was confined to San Francisco and San Jose. We purchased our first home on the dividing line between Los Alto and Los Altos Hills for $36,000 in 1966. We moved to Oregon 20 years later and sold it for $350,000. Last year the same house sold for 2.3 million and the new owner demolished the house to build a new, more modern structure so the latest value is 5.3 million. When I talk with younger people working in the Bay area such as teachers, I find they are sharing an apartment with four others with little hope of owning a home of their own.

    In Eugene, we sold our dream home many years ago to travel the world for 12 years. On our return we were shocked by the house prices and decided to rent a small apartment on a golf course for $1100 a month. Since we are in our 80’s, this has worked out really well. I bought a new cargo van two years ago and converted it to a camper to have some insurance that we won’t be homeless. We use the van as a vacation vehicle and find that after living in an RV for seven years full time, the 60 sq feet of living space in the van is not so bad. We have a 300 watt solar system that powers nearly everything.

  • gayle May 21, 2018, 8:57 am

    I live 40 miles south of Chicago, the housing prices are getting really expensive, we want to down size from our 3600 sq ft house, but the smaller houses are expensive and need extensive remodeling..the smaller houses are all going up in price, except our house, not going up in value much ?! We are in the burbs and I do not see any homeless here.. I also have a rental in Chicago.. I truly do not see many homeless there either but I know they have some great shelters..Morning Star Mission..is really great with them. My rental in Chicago is in a great area off Michigan Ave , I could never afford to buy there again. Housing does seem to really be going up all over the area

    • retirebyforty May 21, 2018, 9:08 pm

      That’s strange. How come your big house isn’t increasing in value?

  • Lily | The Frugal Gene May 21, 2018, 8:27 am

    It’s a biggggg issue in Seattle. The city itself is loaded with cash but the council has a spending problem. They claim to want to fix affordability but you know how these things usually turn out. It’s just like rent control. It’ll find someway to backfire and we’ll be in worst conditions (for the have nots).

    Micro apts are a great idea! Efficient!

    • retirebyforty May 21, 2018, 9:07 pm

      Right. Things never work out that well with the city in charge. They always seem to mess it up somehow.

  • Helen May 21, 2018, 8:00 am

    Joe, very good topic. This is going to be a huge challenge for our next generations. Do they have to select where they want to live solely based on the house affordability? That would be too sad. They are young, and should have the chance to explore and adventure. I don’t know.

    The house prices in central Ohio went up lately. For the good school districts, the houses are getting expensive. Many houses are still affordable, but you have to compromise on a lot of things.

    Homeless is a complicated issue. It’s related to housing affordability, but also related to drug and alcohol addictions and other issues. I hope the innovative people could spend more time and resources to tackle this big social issue. A great social project to work on.

  • [email protected] May 21, 2018, 7:49 am

    Oh it is absolutely a problem! I don’t know what the solution is though. There’s rent control and rent stabilization here in NYC but it’s complex and I don’t know how well it’s working either. I live in a neighborhood with a good school district but I’m not in Manhattan or a hip part of BK…and I saw a short sale for like $700,000 which probably needs work. And that house was farther from the subway than where I am currently. Many here buy co-ops which are a little more affordable than houses but even those are expensive with the high maintenance costs. With a growing family…I’m not sure what we do next. I bought a property in the Midwest and one upstate NY and I’m really envious of the prices there!

    • retirebyforty May 21, 2018, 9:05 pm

      Maybe you can move to a cheaper location eventually. NYC is super expensive.
      Most people will just have to rent.

  • Julie @oursabbaticallife May 21, 2018, 7:07 am

    Your comment about the current state in Portland reminds us of our own experience: “Out of state visitors are surprised by the prevalence of problem. It doesn’t feel like the same country as where they’re from. Homelessness is very visible here.” We’ve seen first-hand the rising homelessness problem in Portland. Probably because Chicago is much colder, we don’t see quite as much of this problem here, especially during the winter.

    It was MUCH worse though when we lived for a month in downtown Los Angeles. And San Francisco is worse than that even. My husband, when he was on business trips to SF, said getting around the city to take an early morning flight out was eerie since the presence of the homeless was so much greater than everyone else out and about at that time. As you wrote, it’s really like walking through another country.

    • retirebyforty May 21, 2018, 9:03 pm

      I saw some pictures from CA. It looks really bad. There are just so many more people down there.
      Portland is a much smaller city.

  • Homelessness is a problem everywhere; I think it’s just a matter of how big of a problem in any given city. I remember travelling to southern California a few years ago and being shocked at how visible a problem it was. Up in London ON, it’s still a problem, but it’s far more hidden from public view.

  • Mr 39 Months May 21, 2018, 6:22 am

    Here in the Northeaster US, we have very cold weather which causes issues with the homeless population (we sometimes have weather warnings and the police sweep the streets and get everyone inside). This may keep our homeless problem more at a certain level, and no higher.

    Its interesting that in the West, the cities (and the states, somewhat) seem to be splitting into the very rich, or the very poor, with less room for the middle class. Some of this has to do with zoning, some of this has to do with the explosive job growth, especially in the highly paid tech sector.

    I’ve also noticed that the more you subsidize/pay for something, the more you get – and Seattle, San Fran, Portland, etc. have some of the most generous programs for the homeless. I was just visiting both SF and Portland, and have to say, its a sad situation.

    Good luck out there.

    • retirebyforty May 21, 2018, 1:39 pm

      I’m not sure about the social programs. The homeless problem probably will be bad even if Portland stop their social programs. I read that good programs aren’t the problem, but who knows. Most of the homeless in Portland are local. I think it’s 75% or something like that.

  • Tom @ Dividends Diversify May 21, 2018, 6:02 am

    I’m not really an expert in this area regarding homelessness to offer an opinion. I was talking to a real estate agent yesterday and she said our town average sale price just got back to the peak level from the boom in 2006. Nothing like some areas like Seattle and Vancouver that have sky rocketed. I wonder how wealth off people afford the cost. Tom

    • Mr Green May 21, 2018, 11:22 am

      I’m from Vancouver. It’s all anyone talks about over here. You need your parents help for a downpayment for any chance of buying a detached house and most apartments. It’s very difficult to even find a place to rent.

    • retirebyforty May 21, 2018, 1:37 pm

      It took a while for you guys. In Portland, it depends on the property. Some places just got back to the peak. Many have surpassed the peak a few years ago. It’s still a lot more affordable here than Seattle or Bay area. How long can this go on?

  • Felipe May 21, 2018, 5:54 am

    Colorado it’s a definite problem. I was just in Houston and there are still affordable pockets if you don’t mind less desirable areas or redoing a flooded property but Denver and the mountains have lost the little known pockets of affordability. People live in used RVs.
    Most of my life my housing was 50% of my takehome. I was socking away in the 401K and, when buying, doing 15 year mortgages and prepaying those also. But it was still tough.
    Many people are opting for smaller cities, Boise instead of Denver, Des Moines, Sioux Falls, for quality of life and affordability. Remote work possibilities help that trend. I also think airbnb/vrbo is messing up the market taking houses out of long-term rental pools. I don’t have the solution, but it’s not a healthy or humane situation.

    • Wilson May 21, 2018, 11:00 am

      Very interesting point about Airbnb and how it can impact affordability. Here in New Orleans it’s become very heated about the whole-house rental issue, with many blaming their prevalence for the lack of affordable housing units. There are naturally distinct issues at play here, such as the many decades long-standing prevalence of blight and more recently Katrina flooding affecting the size of the private and public housing stock. From my vantage point the problem is similar to that faced by Austin and the NW cities like PDX and Seattle — the area is becoming too popular for its own good, houses that hadn’t been sold in a generation or more are being sold to the newcomers, which mean that rents have to be raised significantly to cover the much higher mortgages (doubles/ duplexes are quite common). And here it’s not like you can build your way out of the situation – even the low lying swampy land was reclaimed decades ago and developed. Meaning gentrification is a real problem and only likely to abate if/ when investment does, and the poor will continue to get pushed out to the fringes where they’ll have even less access to our underfunded public transportation system.

      So I voted yes to the poll.

    • retirebyforty May 21, 2018, 1:35 pm

      Really? I thought CO was still pretty good. I know Denver is pretty expensive.
      50% of income is a huge percentage. Sorry to hear that. 15 year mortgage is usually a good deal, though.
      I hope it’s paid off soon. Thanks for your input.

  • We actually build micro housing (on the Eastside of Seattle), and at LEED Platinum standards, so they’re really green construction as well. We’re just one small group though, and even all the units we’ve built can’t even scratch the surface of the affordability problem around here, unfortunately. But I’m pretty dang passionate about what we do, hence why I have no plans for early retirement. Too much left to do 🙂

  • Adam May 21, 2018, 5:34 am

    I agree with the above that it’s rough in DC — but nowhere near as bad as it sounds out west, and not particularly more noticeable than it was decades ago.

    The DC area is weird; you go two miles outside of town in one direction and good luck finding anything under $1.5m, but you go two miles outside of town in the opposite direction and it’s a piece of cake to find a fixer-upper for $150k. The push/pull of downtown vs. suburbs (white flight after the 1960s riots, now flocking back for the last fifteen years as downtown has reinvented itself) has generated a lot of wealth but left even more folks in the dust. If those folks are lucky, they can cover skyrocketing property tax or cash out. Often they aren’t lucky.

    • retirebyforty May 21, 2018, 1:27 pm

      That’s a big difference for 2 miles. Here you probably need to go about 10 miles out to find cheaper housing. That’s still not too bad, though. I’m sure LA is a lot worse.

  • Mr. AE May 21, 2018, 5:05 am

    Minnesota has surprisingly expensive home prices for a mid-western State, especially in Minneapolis and the suburbs. A lot of people are priced out of owning a home.

    That being said, I see very few homeless people – might not travel through the right areas as I’m sure we have our fair share.

  • Lazy Man and Money May 21, 2018, 4:54 am

    I’ve been reading an article (it’s nearly a book in length) in The Atlantic this week, “The 9.9 Percent Is the New American Aristocracy.”


    Unfortunately there isn’t a TL;DR, but the crux of it is that there are a lot of ways that top 10% net worthers systematically stay on top while the 90% are going nowhere. This happens through location (better jobs and schools), marriage, and even tax code (appreciation of deductible real estate, stock market capital gains, etc.)

    • Julie @oursabbaticallife May 21, 2018, 7:15 am

      We’re reading the same article, and it IS a very long one and not one that you can just get through in one sitting. We found the very short blurb on title page interesting too: “The class divide is already toxic, and is fast becoming unbridgeable. You’re probably part of the problem”…

      • Lazy Man and Money May 23, 2018, 7:15 am

        I’m on my 4th or 5th sitting and still trying to get through it :-). My sitting times are smaller though.

    • retirebyforty May 21, 2018, 1:24 pm

      I’ll check it out. It’s only natural to try to stay at the top 10%. Nobody wants their kid to slide downward. It’s a rigged game, but we still have to play it.

    • Camille May 22, 2018, 8:58 am

      I finished the article from the Atlantic on the weekend. It’s quite thought-provoking and well-worth the time required to read it all the way through. Sadly, effective and lasting solutions to the problem of income inequality and rising poverty rates are not readily available. The responses to Joe’s post persuade me to think that North America is returning to the feudal land systems of the past, where the concentration of land ownership and the privilege of obtaining an education are again becoming the privilege of the wealthy.

      • Lazy Man and Money May 23, 2018, 7:22 am

        Camille, I can definitely see that.

        My only qualification there would be certified education. There are more free ways to learn things now than ever before, even classes from MIT. Between the information available online and in libraries, it seems that almost all learning would be available for free or low cost. Getting that piece of paper of proof that you learned it is what is expensive. Most often that piece of paper is also the gatekeeper for higher income jobs. It just seems like there’s a bigger gap between the two types of learning.

  • FullTimeFinance May 21, 2018, 4:45 am

    Not an appreciably bigger problem here then it has been. Then again housing costs haven’t changed much here in last decade.

    Still there is a group that lives in one particular area and a few homeless in the city. But I wouldn’t say it’s much more then it was twenty years ago.

    Then again I see it rampant out west. Like water shortages just something we don’t have here.

    • retirebyforty May 21, 2018, 1:23 pm

      That’s good news for you guys. Where are you located? A few homeless people isn’t too bad. There are just too many here on the west coast.

      • Full Time Finance May 27, 2018, 5:46 pm

        Northern Delaware. Not much here either, other then easy drives to DC, New York, and Philadelphia.

  • Ms. Frugal Asian Finance May 21, 2018, 4:42 am

    It is a problem in DC. There is usually a huge crowd of homeless people near Judiciary Square.

    I went to Seattle last year and also saw a lot of tents and makeshift housing in public areas. Most of the homeless people I saw were black. It was a sad scene.

    I’d love to try living in that tiny apartment to see what it’s like. It looks so cosy and modern!

    • retirebyforty May 21, 2018, 1:21 pm

      The tiny apartment sounds good, but you need really good management. I read up more and it sounds like there are a lot of problems too. The common area and the kitchen are left messy. The construction wasn’t great. etc… It sounds like a nice idea, but you need good execution to go with it. It’s also pretty expensive at $1,000/m. Not cheap.

  • Pennypincher May 21, 2018, 4:40 am

    Very telling post, Joe. Especially the stats on needle usage more than tripling in 4 years! And the “well being” poll by Gallop, that everyone should read into further! Revealing.
    I don’t think local govts. know quite what to do about all this, but at least they have defined the problem, a good start.
    I sense the whole problem starting over again w/affordable housing-not being able to afford a mortgage, or taking out a jumbo loan. Isn’t this the stuff that got many into trouble in the last crash of 2008? A house is a money pit, w/o the mortgage!
    A wise realtor once told me, “buy what you need, not what you want.”
    I too was thinking we need more micro housing to help w/the affordable housing issue.
    Thanks for the info.

    • retirebyforty May 21, 2018, 1:19 pm

      The drug problem is pretty bad in the homeless population. The biohazard is pretty crazy too. (That’s code for human feces…)
      I don’t think anyone know the solution anymore. The city keep trying new things, but it never work. There are just too many problems.

  • Cubert May 21, 2018, 4:24 am

    Excellent post, Joe. We have the same problem in Minneapolis, mainly with affordable housing. As a landlord, I’m pained to keep raising rents, but the property tax increases sort of force my hand.
    Homelessness is less visible here, I think mainly because of the weather. To your point, better to be somewhere with mild climates if you don’t have a roof over your head.
    I also agree with you that you can’t just bury your head in the sand and rely on macro trends to feel better about the problems in your own backyard. Having just spent a day working for Habitat for Humanity last week – there’s a heckuva lot we can do to put a dent in this very real problem.

    • retirebyforty May 21, 2018, 1:16 pm

      Minneapolis too? I don’t want to raise the rent too much either. Usually I try to keep it around 7-8%. Everything is getting more expensive so rent can’t stay the same.
      I wouldn’t want to be homeless in Minneapolis. That’s way too cold.
      Thanks for working with Habitat for Humanity. Good job.

  • Accidental FIRE May 21, 2018, 4:01 am

    Housing affordability is a problem in many areas, and some HCOL areas are spiraling out of control. I have a post on housing affordability coming up, this will fit in nicely with my analysis!

  • Half Life Theory May 21, 2018, 2:42 am

    Over the last few years, i have noticed the housing problem get worse gradually. In my opinion it will continue to decline, as majority of people still don’t have a great handle on finances.

    So as we continue to grow and prosper economically, things will undoubtedly get more expensive, including housing. To the point where even the middle class worker with no grasp on finances, becomes hard pressed to afford housing.

    Let’s not even get into what automation will do to blue collar jobs, and possibly white collar jobs in the future. If we don’t take responsibility for our future, things won’t get any prettier.

    • retirebyforty May 21, 2018, 1:14 pm

      Life is going to hard for our kids, that’s for sure. I really hope inequality improves in the next decade. We can’t keep going this way.

  • cher May 21, 2018, 2:32 am

    It has been a huge problem for me. I am in Massachusetts and rent. I’ve been saving for a house down payment for 4 years. In that 4 years, the housing prices have increased dramatically. I now fear that I will not afford a small house in my hometown or anything in my county for that matter. Also, as soon as a home goes on the market they are snapped up in weeks.

    • retirebyforty May 21, 2018, 1:11 pm

      That sounds bad. Is this in a big city? It might be tough for a while longer. The housing market should correct itself at some point.

  • FIREin' London May 21, 2018, 2:15 am

    Hi Jo,
    Well… I live in London. I suspect you can imagine the answer, but yes its a huge problem here. Buying a place you aren’t going to get much (think flat not house) for under £400,000 – and that is likely to involve at least a 1 hr commute each way on tube / train.
    Even the rents are expensive, but space is a premium.. and there are lot of opportunities…

  • Near a good school here a thousand sq ft condo can easily go for $2.2 million usd … they ship squatters back to their villages …you can not get hitched if the man doesn’t have a condo ..from the far side of the planet…

  • anonimoprocione May 21, 2018, 1:57 am

    I live in London. House affordability doesn’t exist anymore. Prices doubled and tripled in the span of few years (sold houses prices are public and can be found on http://www.rightmove.co.uk/house-prices.html , I looked at 2010-2017) . This has nothing to do with population growth. London saw its population grow by 5.7% during the years of the price craze (up to 140% within 2 years or maybe even more). It’s all about speculation and people investing in rental sector to have big returns. Salaries are stagnating in comparison to this prices spike. It does not make sense. To make things worse, the government initiated a program called Help to Buy a couple of years ago, letting people buy a portion of newly built houses. Eg 30% and leaving the rest of the ownership to housing associations that will rent it to the ‘partial’ owner. So for example, 5000£ deposit and then 500£ mortgage, 500£ house association rent and 200£ management fees. This idea is a financial suicide for the individual and lets slip the idea that 750k £ for a 2 bedroom flat in an up and coming random area is the right price (which is not). Fortunately, the government has recently approved new rules to make buy-to-let less and less profitable. Prices are starting to decrease (-2% April 2018). At present time, middle-class families (80k £ per year) cannot afford most of the 2 bedroom houses in London outskirts unless they have 60k £ deposit to pay. If middle-class cannot afford, imagine working-class. This is just insane. Tons of new buildings are in construction in up and coming areas of London and the only ones who buy them are Help to Buy buyers and investors for buy-to-let because they are insanely prices (700k £ for a 2 bedroom in an area that at present is ugly and underdeveloped). How long can this joke go on? How long can investments of the few and speculations win over people’s reality? Things have to change and fast… And I hope they will. Brexit uncertainty already slowed down buy-to-let and real estate investments. I want to buy a house eventually, but I can’t buy with these prices, it’s not fair. If things continue like this, I will seriously think about buying outside London.

    • Pennypincher May 21, 2018, 10:24 am

      Dear Anon-my working professional daughter would love to continue her career for a while in London. I told her it was a losing proposition, finance-wise. She’ll return in the red, not black.

    • retirebyforty May 21, 2018, 1:05 pm

      Yikes! I know London is worse than Portland, but I didn’t know it was this bad. The Help to Buy program sounds complicated. I guess it’s not working as intended. What can you do at this point? Buying outside of London will make a long commute right? It might make sense if you can work remote most of the time. Good luck..

    • David @ VapeHabitat July 25, 2018, 6:02 am

      Luckily, I live in CA and have good income)) So, no housing affordability problems. Thanks for asking)

  • BusyMom May 21, 2018, 12:44 am

    We live in the suburbs of Boston. In one of the cheaper single family homes. It still costs about 500,000 dollars. Even though we are paid well above the average, if only one of us were working, mortgage would be over 40% of our take home salary.

    The house is about 1600 sqft, and shows its age – close to 60 years.

    It would be less expensive if we moved to a condo or a town house or even another town. We picked this town for the school district. There are better school districts near by, but the home prices would have been higher.

    • retirebyforty May 21, 2018, 9:22 am

      A good school district makes a huge difference. We live in a good school district and we don’t have to worry about our son’s education.
      Thanks for sharing.

  • Michael @ Financially Alert May 21, 2018, 12:36 am

    Joe, I’m definitely seeing affordability in San Diego go down the pipes. As a landlord, it works in my favor, but I feel for those who want to own their own home. The median home price in San Diego is $626k! So, you’d better have a stash of cash for a DP and a good paying job. If I were starting out and know what I know now, it’s quite possible I’d just keep renting for a while.

    • retirebyforty May 21, 2018, 9:21 am

      Do you see homeless people in your neighborhood or is it more concentrated in certain areas? You’re in the burb, right?
      I still think buying is better than renting. Rent is increasing every year. Landlords have to pass down the increasing cost (tax, HOA, etc…) to renters.

      • Michael @ Financially Alert May 23, 2018, 4:54 pm

        Yes, it’s definitely more concentrated in the metro areas vs. the burbs where I live. Our city had a pretty issue this year with a Hep A outbreak amongst the homeless population. So, that brought forward the issue a bit which is good I think. I tend to support organizations that do homeless outreach for long-term change vs. pure handouts. Everyone needs a helping hand sometimes.

  • Mr. Tako May 21, 2018, 12:31 am

    Yes, housing affordability and homelessness are a huge problem here (the Seattle area). You’ve probably heard about how the local city council passed a head-tax on large businesses to help fix some of that problem. Supposedly they’ll build affordable housing soon. I hope so.

    In the meantime, the situation is kinda gross. Tents everywhere, garbage, human feces in public parks, etc.
    Meanwhile, a friend who works at a local tech company just purchased a home for over $915k. Not terribly expensive by Bay Area numbers, but expensive enough.

    The difference between the have-and-the-have-nots is definitely growing. IMHO builders should not get permits to build another 4,000 square foot mansion unless they’re also building affordable low cost homes.

    • retirebyforty May 21, 2018, 9:19 am

      The city is trying to encourage more affordable housing, but there is too much red tape. The builder can build regular housing at a lower cost. It’s complicated. It’s pretty crazy to pay $915k for a house and see homelessness in the neighborhood. I guess that’s just the norm now.
      I think those micro apartments are great, but the price is still too high. For 165 sq ft, it should be like $500. At least, you’ll have an address so you can find work.

      • Pennypincher May 21, 2018, 10:19 am

        Very interesting reply, Joe. It is indeed complicated.

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