Who Are All These Pricey Condos Being Built For?

I don’t know anyone who can afford to buy a million-dollar home, and it sounds like you don’t either.

Who are all these pricey condos being built for? A new development within blocks of me is asking $1.2 million for a two-bedroom with no yard. Were these built with real people’s housing needs in mind, or just as investments intended to remain vacant, à la Vancouver, B.C.? —Perpetual Renter

Most of us have gotten in the habit of assuming that if something fucked up is going on in the housing market, Portland is probably the capital of it. So you may be surprised to learn that, according to Redfin, only 11% of our recent home sales have gone to real estate investors, compared to 19% for the nation as a whole. Yay, us.

Now, if you’re like me, you’re wondering: Who the hell are these people? I don’t know anyone who can afford to buy a million-dollar home, Perpetual, and it sounds like you don’t either. Are there really enough rich people to buy all these dumps?

It turns out, to my mild horror, that there probably are. (Maybe we don’t see them because they can afford to avoid us.) Around 9% of Portland households are at or above the $265,000 income level where you can ask about a mortgage for a million-dollar house without having the banker call security. That’s actually right in proportion with the 15% of current Portland home listings priced over $1 million (as long as you squint and pretend the bottom two quintiles of the income distribution don’t exist, a trick that comes in handy for many kinds of economic analyses).

The real question is whether there are enough slightly less rich people to buy all the slightly less than million-dollar homes. A dispatch from Oregon’s Office of Economic Analysis reported in July that just 23% of Portland households could afford an average ($550,000) home. Surely with so few buyers the market will return to earth soon, right?

Here’s the thing: That estimate was based on household income alone. But the flip side of needing a million dollars to buy a house is that everybody who already has a house now has a million dollars.

So, if your parents are homeowners (especially if they also smoke and don’t get a lot of exercise), you’ll get your house soon enough. Then you can join the homeowner class that will spend eternity swapping houses back and forth among themselves like mahjong tiles. If you chose your ancestors less carefully, however—well, you can always come live with me in my van.

Questions? Send them to dr.know@wweek.com.