Portland Affordability Index – PABAI: A Realistic Housing Qualification Metric for the Portland Region

The Portland Appraisal Blog Affordability Index (PABAI) is an appraiser-developed metric designed to measure realistic housing qualification across single-family residential segments in the Portland Region six-county market (Columbia, Clackamas, Hood River, Multnomah, Washington, and Yamhill counties in Oregon).

Built entirely from local closed-sale data and actual carrying costs, the PABAI provides lenders, realtors, homeowners, estate planners, and attorneys with a transparent view of affordability grounded in daily valuation and underwriting practice.

Purpose and Distinction

National affordability indices serve a useful broad purpose but frequently rely on principal-and-interest-only calculations, national assumptions, and simplified cost inputs. The PABAI takes a different approach by incorporating full monthly housing expenses specific to the Portland Region—revealing local qualification realities that generic metrics often overlook.

The index is expressed on a scale where a value of 100 indicates that typical household qualification exactly aligns with the median sale price in the segment under the modeled assumptions. Values above 100 suggest greater affordability, while values below 100 highlight constraints.

Interpreting PABAI Values

The following bands offer practical context for segment-level readings:

PABAI Range	Interpretation	Practical Implications
120+	Strongly Affordable	Typical qualifying power provides a meaningful buffer against the Portland Region’s elevated utility, maintenance, hazard insurance, and (where applicable) HOA costs.
100–119	Moderately Affordable	Accessible market—household income aligns with or exceeds full PITI costs, including property taxes, homeowners insurance, and HOA dues where applicable.
80–99	Strained	Qualification constraints emerge; buyers often need larger down payments, dual high incomes, rate concessions, or removable mortgage insurance to bridge the gap.
Below 80	Severely Constrained	Significant affordability barrier—median household falls short of qualifying for typical sale prices under standard underwriting, particularly when mortgage insurance is required for low-down-payment scenarios.

Methodology

The PABAI derives from Regional Multiple Listing Service (RMLS) closed sales of single-family residential properties—detached homes, attached homes, condominiums, and manufactured homes on owned land—within the Portland Region.

Extensive quarterly cleanup corrects widespread misclassifications in raw data, especially condominiums incorrectly listed as attached or detached properties. This step ensures accurate segment separation critical to valuation and lending differences.

Core elements include:

• Income basis derived from U.S. Department of Housing and Urban Development (HUD) area median income tables and U.S. Census Bureau American Community Survey (ACS) data, with cohort-specific adjustments where applied.
• Full Principal, Interest, Taxes, and Insurance (PITI) calculation; Homeowners Association dues added for attached, condominium, and detached segments where applicable (PITIH); Mortgage Insurance incorporated for low-down-payment scenarios (PITIHM).
• Interest rates matched to each sale’s close date via Freddie Mac Primary Mortgage Market Survey data.
• Actual property taxes reported for each sold property and regional averages for homeowners insurance.
• Default qualification at 28% front-end debt-to-income ratio and 20% down payment.

Formula

The Maximum Qualifying Price (MQP) is the highest home price a typical household can afford under the modeled assumptions, calculated from applicable income, debt-to-income ratio, interest rate, and full monthly housing expenses (PITI(H)(M)).

The PABAI begins with an individual affordability ratio for each sold property:

$$\text{Individual Ratio} = \frac{\text{MQP}}{\text{Actual Close Price of the Property}}$$

The segment or regional index value is the arithmetic mean of these individual ratios across all sales in the period, scaled by multiplying by 100:

$$\text{PABAI} = \left( \frac{\sum_{i=1}^{n} \left( \frac{\text{MQP}_i}{\text{Close Price}_i} \right)}{n} \right) \times 100$$

where n is the number of qualifying sales.

A value of 100 indicates exact alignment between typical qualification and the median (or mean) sale price under the assumptions. Values above 100 reflect excess qualifying power; values below 100 indicate a shortfall.

Model Flexibility and Scenario Analysis

All assumptions remain modular, allowing granular simulations such as:

• Alternative down-payment levels (e.g., 3.5% FHA, 0% VA, 5–10% conventional).
• Varied debt-to-income ratios or mortgage insurance rates.
• Specific buyer cohorts (e.g., households headed by individuals aged 25–44).
• Elevated carrying costs from hazard insurance or special assessments.
• Geographic breakdowns at the county or city level.

This flexibility supports targeted analyses of financing program effects, buyer pool depth, and external obsolescence driven by persistent monthly expenses.

Current Readings

PABAI values are updated quarterly. Detailed regional and segment readings appear in the latest reports listed below.

PABAI Publications and Reports

Portland’s First-Time Buyers Have No Choice But to Wait Until 40 — Q3 2025 Data Explains Why

Additional quarterly analyses and annual PDF reports will be added as published.

Data Sources

The PABAI draws exclusively from primary sources, including Regional Multiple Listing Service (RMLS) closed-sale records, U.S. Department of Housing and Urban Development area median income tables, Freddie Mac rate data, and U.S. Census Bureau inputs.

The index is provided for informational purposes only. Individual qualification and valuation decisions should involve qualified professionals.