The Harvard Joint Center for Housing Studies (JCHS) has taken a big pot and stirred in some Census data, Freddie Mac survey results and National Association of Realtors info and come up with this conclusion: In some metros in this great nation of ours, people between the ages of 25 and 34 who are currently renting could actually afford to own a house.
How is this defined? Glad you asked. According to JCHS:
Affordable owner costs are monthly mortgage payments, insurance, and taxes that do not exceed 35% of incomes. Mortgages assume a 5% downpayment, a 30-year fixed-rate mortgage at 2013 interest rates on the median priced home for that metro.
The problem is that these young renters, as JCHS calls them, can’t afford to buy a house in the first place.
In the Philly metro area, it’s not as though this is a crushing problem to begin with, as the share of renters who can afford to own is only 43.4 percent. This isn’t too much higher than the percentage rate of homeownership among the same demographic, which is 39.8 percent. Other stats:
Overall Homeownership Rate (Percent) 67.7
Median Income, Renters Aged 25-34 40,586
Median Home Price (Dollars) 217,700
Monthly Owner Costs (Dollars) 1,378