econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 16 June 2015

Raise Homeownership By Lowering Rents

by Zillow

Renting is traditionally a stepping stone to homeownership. And an affordable rental market typically coincides with higher homeownership rates. More affordable rents allow households to save money for a down payment on a home and other home-buying expenses. On the flip side, less affordable rents in some markets often go hand-in-hand with lower homeownership rates, as more money going into landlords' pockets each month means less going into tenants' savings accounts.

As the rental affordability crisis spreads in the face of stagnant wages and rapidly rising rents, and as buying a home increasingly looks like a bargain compared to renting, Zillow analyzed 106 metropolitan areas to determine how rent and mortgage affordability impacted homeownership.[i]

Large California metros, with Los Angeles leading the way, typically feature both the highest rent burdens and lowest homeownership rates (figure 1).

Of course, areas with more affordable mortgages - areas where the typical monthly mortgage payment consumes a smaller portion of a household's income - also tend to have higher homeownership rates (figure 2). And areas with more unaffordable mortgages have lower homeownership rates.

But even in areas where mortgage affordability is poor, buying is almost always more affordable than renting. The only metro analyzed in which mortgage affordability is worse than rental affordability is in San Jose. Knowing this, why aren't highly-burdened renters in most areas opting to become slightly less-burdened homeowners? High rents that make saving more difficult, low for-sale inventory (especially of less expensive starter homes likely preferred by first-time buyers and current renters) and tight (but improving) mortgage credit are all likely to blame to some degree.

Once again, Los Angeles takes dubious top-spot honors among all metros surveyed, boasting both the worst mortgage affordability and the lowest rate of homeownership. The rest of the large California metros all fall into a similar situation.

But there are areas where both rentals and homeownership are affordable, and where the homeownership rate is fairly robust, including Youngstown, Ohio, and Augusta, Georgia. The Pittsburgh, Pennsylvania, area is crushing it in pretty much every affordable housing way: Steel City home buyers should currently expect to spend just 11 percent of their income on a mortgage and 25 percent of their income on rent, both well below national averages. The Pittsburgh-area homeownership rate is currently 70 percent, well above the national average.

Metros like Los Angeles, San Francisco and San Diego are among the most unaffordable markets in the country, especially for low-income residents, so it is little surprise that homeownership is low. In Los Angeles, for example, low-income households looking to buy in LA should expect to spend 85 percent of their income on a mortgage - essentially putting homeownership out of reach.

Times are tough in California, especially, but also in dozens of other markets nationwide. And at least with regard to rental affordability, things aren't expected to get better any time soon.

[1] Homeownership rate calculated from 2013 American Community Survey. IPUMS-USA, University of Minnesota, www.ipums.org.

Click here for Historical News Post Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted. You can also comment using Facebook directly using he comment block below.




Econintersect Contributors


search_box

Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.


Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
Why Long-Run Theories of Profit and Accumulation Fall Short
Brexit - Who Wins and Loses
News Blog
Earnings And Economic Reports: Week Starting 24 April 2017
What Americans Think About Climate Change
What We Read Today 23 April 2017 - Special Public Edition
What We Read Today 23 April 2017
What Would A Civilization 1 Billion Years Older Than Us Be Like
Understanding The Downward Trend In Labor Income Shares
Why Renegotiating NAFTA Could Disrupt Supply Chains
Public Relations Nightmares
Catch Me If You Can
U.S. Consumer Debt Rises Overall, Housing Debt Drops
Infographic Of The Day: Graphene Is The Game-Changing Material Of The Future
Early Headlines: CB Bal. Sheets Still Growing, GOP Doing Too Much, May Threw Ulster Under Bus, French Election, China Vs. Pollution, Venzuela Gave To Trump Inaug., And More
NOAA and JAMSTEC Issue Seasonal Updates - Winter in Doubt
Investing Blog
The Week Ahead: Build That Wall!
How To Trade Earnings Announcements
Opinion Blog
What Does The Strong Q1 Growth Mean For China?
Marx, Orwell And State-Cartel Socialism
Precious Metals Blog
Three Gold Plays For The New Era Of Chaos
Live Markets
21Apr2017 Market Close: US Stocks Slipped Moderately, WTI Crude Slips On Renewed Concerns Of Increasing U.S. Production, Industrial Businesses' Cash Outflows Concern Investors
Amazon Books & More






.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government































 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2017 Econintersect LLC - all rights reserved