NewPanda
NewPanda
REAL ESTATE UPDATE

  company
       

 



               


WHY RENTERS CAN AFFORD TO BUY A HOME

By Scott Morgan

Consumer house-buying power — how much one can buy based on household income and the 30-year, fixed mortgage rate — is up 55 percent since 2006. So writes Mark Fleming, Chief Economist at First American, in a blog looking at the concept of housing affordability through the eyes of renters.

According to Fleming, "a renter's house-buying power is based on the median renter's income, the prevailing 30-year, fixed mortgage-rate, and assumes a 5 percent down payment, and that one-third of their pre-tax income is used for the mortgage. The renter's house-buying power can then be used to see what share of the homes for sale the renter could afford to buy."

Extrapolating that approach to the national housing market, Fleming compared the current buying power of the median renter to that of the median renter in 2000. Back then, he said, the median renter had an income of $40,750, which translated into $163,232 of house-buying power.

In practical terms, it meant that the median renter of 2000 could afford to buy 57 percent of the homes on the market.  By 2006, though, spikes in living expenses, from petroleum and utilities to climbing housing prices, chipped the potential to buy down to 38 percent of available homes for the median renter, Fleming wrote.

Six more years later, in 2012, following a housing collapse that left thousands of properties on the market for lower prices, the median renter's $254,000 in buying power meant that that renter could afford 68 percent of homes on the market nationally. That's the highest rate First American has ever tracked.

By 2017, the median renter could afford to buy 64 percent of all the homes sold, Fleming wrote.

"Additionally, over the last three years, renter house-buying power has increased fast enough to keep pace with house price appreciation, so the share of homes that a renter can afford to buy has remained the same since 2015," he wrote.

So despite sometimes gloomy looks into affordability — which industry insiders frequently say is suffering under the weight of escalating prices and tight inventory — the big picture as Fleming paints it is more optimistic.

"Although mortgage rates are expected to rise, they are still low by historic standards, and real household incomes are the highest they have ever been," he wrote. "Assuming this trend continues, our measure of affordability, which takes into account income, interest rates, and house prices, indicates that homeownership is still within reach for renters."


Scott Morgan is a multi-award-winning journalist and editor based out of Texas. During his 11 years as a newspaper journalist, he wrote more than 4,000 published pieces. He's been recognized for his work since 2001, and his creative writing continues to win acclaim from readers and fellow writers alike. He is also a creative writing teacher and the author of several books, from short fiction to written works about writing.

Original Source: MReport
  





















     
  DID YOU KNOW?
 



   
  Dr. Seuss has a house in Alaska  
 
 





View Listing
800 Linda Flora Drive




NewPanda





Featured Photo

Weave Bridge, PA

 

Stats










 

     
   
     









 

 

         

  box
         




           

  TRENDING



GENERAL NEWS & VIEWS
Feature Photo  
HOW TO CHOOSE BETWEEN BUY NOW, PAY LATER, AND A CREDIT CARD AT CHECKOUT
Which payment method should you use? When does it make more sense to use a credit card versus buy now, pay later?
 MORE


Feature Photo  
ELEVEN WAYS TO HANG ANYTHING ON A WALL
From TVs, mirrors, pictures, and more. If you need to hang something on the wall, this is how to do it.
 MORE


Feature Photo  
GREEK MYTHOLOGY BOOKS AND RETELLINGS THAT'LL TAKE YOU BACK IN TIME
From graphic novels to historical fiction to teen reads and more, these Greek mythology books appeal to a range of readers.
 MORE





INTERESTING READS


Feature Photo  
HOW TO PREPARE FOR A CLIMATE DISASTER EVACUATION
Climate disasters can happen anywhere. You should be ready for one in your area.
 MORE


Feature Photo  
HOW TO FIND THE BEST DEALS ONLINE
Prepare your budget, shop at the opportune time, and compare retailer prices and policies.
 MORE


Feature Photo  
FREE EDUCATIONAL APPS TO MAKE YOUR KIDS PHONE TIME COUNT
Whether you have a child in Pre-K or an older student, there are tons of free apps designed to engage and pique your child's curiosity.
 MORE






 
           




         

 
 
NewPanda 
800-298-5055
help@newpanda.com

         



       


                   

   



 
NewPanda 
800-298-5055
help@newpanda.com




   



   



 
NewPanda 
800-298-5055
help@newpanda.com