Spending over 40% of income on rent is nothing new in New York City, Los Angeles and Miami but…
Those trends are taking hold in more and more metro areas around the country as well!
So while rents continue on a sharp upward trajectory, it may surprise some (or not) that while the national average of monthly income going to pay rent is now 30.2%, a homeowner with a mortgage can expect on average to be paying only 15.1% of their income on that monthly expense.
But remember that while that disparity seems large, the 15.1% number for homeowners does not factor in other expenses they will incur that renters do not face such as property taxes, property maintenance, etc.
So now you may be asking yourself the following question: If the affordability needle seems to favor owning over renting, what is keeping first-time buyers out of the market?
The answer is that in what one might call a vicious cycle it ‘s the very rents they are paying that make it difficult to save money for a down payment.
The following chart provided through a Zillow study examines metro areas around the United States comparing current, historic and projected comparisons of the rent vs buy argument…
|
Metro Area |
Current Percentage of Monthly Income Spent on Mortgage Payment (Q2 2015) |
Historic Percentage of Monthly Income Spent on Mortgage Payment (1985-2000) |
Forecasted Percentage of Monthly Income Spent on Mortgage Payment at 6% |
Current Percentage of Monthly Income Spent on Rent (Q2 2015) |
Historic Percentage of Monthly Income Spent on Rent (1985-2000) |
|
United States |
15.1% |
21.3% |
19.5% |
30.2% |
24.4% |
|
New York-Northern New Jersey |
25.6% |
32.2% |
32.1% |
41.3% |
25.3% |
|
Los Angeles, CA |
39.9% |
34.6% |
50.2% |
48.9% |
35.6% |
|
Chicago, IL |
13.7% |
23.1% |
17.6% |
30.8% |
21.8% |
|
Dallas-Fort Worth, TX |
12.2% |
20.2% |
16.5% |
28.7% |
21.5% |
|
Philadelphia, PA |
14.6% |
20.7% |
18.5% |
30.0% |
19.3% |
|
Houston, TX |
12.2% |
14.8% |
15.9% |
30.6% |
23.5% |
|
Washington, DC |
17.5% |
23.3% |
21.8% |
26.8% |
16.8% |
|
Miami-Fort Lauderdale, FL |
20.5% |
20.6% |
26.2% |
44.5% |
27.5% |
|
Atlanta, GA |
12.3% |
19.8% |
16.0% |
25.8% |
18.3% |
|
Boston, MA |
21.7% |
26.0% |
27.2% |
34.4% |
27.0% |
|
San Francisco, CA |
41.4% |
37.0% |
54.7% |
46.7% |
29.9% |
|
Detroit, MI |
10.0% |
17.4% |
13.1% |
25.3% |
17.7% |
|
Riverside, CA |
23.6% |
25.8% |
31.4% |
36.2% |
31.1% |
|
Phoenix, AZ |
17.3% |
20.6% |
22.4% |
28.1% |
21.7% |
|
Seattle, WA |
22.7% |
25.7% |
30.3% |
31.6% |
23.2% |
|
Minneapolis-St Paul, MN |
13.7% |
19.8% |
17.5% |
25.6% |
19.7% |
|
San Diego, CA |
34.1% |
32.8% |
43.4% |
43.7% |
33.9% |
|
St. Louis, MO |
11.0% |
17.1% |
14.3% |
24.2% |
20.1% |
|
Tampa, FL |
14.6% |
18.8% |
18.9% |
32.4% |
26.8% |
|
Baltimore, MD |
15.5% |
22.0% |
19.4% |
29.3% |
24.8% |
|
Denver, CO |
21.1% |
21.0% |
28.1% |
35.0% |
23.4% |
|
Pittsburgh, PA |
10.7% |
15.9% |
13.7% |
24.6% |
26.9% |
|
Portland, OR |
21.6% |
22.2% |
28.8% |
32.1% |
22.6% |
|
Sacramento, CA |
26.0% |
29.8% |
34.1% |
33.5% |
31.1% |
|
San Antonio, TX |
12.7% |
18.6% |
16.5% |
29.6% |
24.9% |
|
Orlando, FL |
16.1% |
21.0% |
20.9% |
32.7% |
22.6% |
|
Cincinnati, OH |
11.2% |
19.8% |
14.4% |
26.9% |
19.6% |
|
Cleveland, OH |
10.8% |
20.0% |
13.9% |
27.1% |
21.2% |
|
Kansas City, MO |
11.1% |
21.2% |
14.4% |
25.5% |
16.0% |
|
Las Vegas, NV |
16.2% |
24.8% |
21.4% |
27.1% |
22.9% |
|
San Jose, CA |
41.9% |
35.1% |
55.3% |
41.5% |
25.6% |
|
Columbus, OH |
11.8% |
20.3% |
15.3% |
26.2% |
19.8% |
|
Charlotte, NC |
13.2% |
18.8% |
17.1% |
26.8% |
18.0% |
|
Indianapolis, IN |
10.9% |
23.5% |
14.2% |
26.0% |
18.6% |
|
Austin, TX |
16.5% |
18.4% |
21.5% |
31.6% |
21.3% |
___________________________________
Article written by Michael Haltman, President of Hallmark Abstract Service in New York.
HAS is a provider of title insurance in New York State for residential and commercial real estate transactions.
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