Tag Archives: first time buyer

Finding an Affordable Home Can Feel Increasingly Out of Reach

A single homebuyer would need to save for nearly 11 years to reach a 20 percent down payment on the typical U.S. home

By Jeff Sorg, OnlineEd Blog

(February 17, 2018)

SEATTLE /PRNewswire/ — In today’s highly competitive housing market, finding an affordable home can feel increasingly out of reach, especially for singles.

A single homebuyer would need to save for nearly 11 years to reach a 20 percent down payment on the typical U.S. home, according to a new Zillow® analysis. However, for married or partnered couples, it would take less than five years. In San Jose, California, a single buyer would need more than 30 years to save for a down payment – longer than the lifespan of a typical home loan.

Zillow’s analysis combined home values and income data from Census to estimate how long it would take for both an individual and couple to save for a 20 percent down payment on the median-priced home, assuming they saved 10 percent of their income every year.

Single buyers typically have a smaller budget than couples, which leaves them with fewer homes to choose from and limits them to the most in-demand portion of the housing stock. The number of homes for sale is limited across the country, down nearly 11 percent over the past year, and nearly 18 percent for the least expensive homes. A single person could afford to buy less than half (45 percent) of the U.S. housing stock, compared to a married or partnered couple, who could afford 82 percent of all homes.

“Nearly two-thirds of Americans agree that buying a home is a central part of living the American Dream, but for unmarried or un-partnered Americans, that dream is increasingly out of reach,” said Zillow senior economist Aaron Terrazas. “Single buyers typically have more limited budgets, which means they are likely competing for lower-priced homes that are in high demand. Having two incomes allows buyers to compete in higher priced tiers where competition is not as stiff.”

The difference between what a single person could afford compared to a couple is greatest in Portland, Oregon, and Sacramento, California. In Portland, 73 percent of homes are affordable to a couple, but only 6 percent are affordable to a single buyer. For Sacramento buyers, a couple could afford 75 percent of homes while a single homebuyer could afford 8 percent of homes.

Single buyers will have it easiest in Indianapolis, where saving for a down payment takes less than eight years, and they can afford the highest share of homes among the largest American housing markets.

Years to Save for a
Down Payment

Percent of Housing
Stock Affordable

Maximum Value of
Affordable Home

Median Household
Income

Metropolitan Area

 Married /
Partnered

 Single

 Married /
Partnered

 Single

 Married /
Partnered

 Single

 Married /
Partnered

 Single

United States

4.6

10.8

82

45

$412,736

$176,098

$80,800

$34,500

New York-Northern New Jersey

7.5

18.8

64

10

$521,518

$208,055

$ 103,000

$41,200

Los Angeles-Long Beach-Anaheim, CA

13.4

26.8

24

2

$438,458

$222,589

$86,000

$42,800

Chicago, IL

4.2

10.2

91

48

$486,310

$197,020

$95,000

$39,000

Dallas-Fort Worth, TX

4.4

9.6

90

54

$440,698

$205,047

$87,800

$40,000

Philadelphia, PA

4.2

10.9

92

44

$491,885

$193,877

$99,000

$38,000

Houston, TX

4.0

8.8

91

58

$438,272

$197,571

$85,000

$39,000

Washington, DC

5.8

12.4

82

34

$652,892

$303,901

$ 129,000

$60,000

Miami-Fort Lauderdale, FL

6.6

13.9

73

31

$361,991

$172,508

$71,000

$33,700

Atlanta, GA

3.8

8.3

90

60

$440,196

$205,081

$87,000

$40,000

Boston, MA

6.8

17.6

74

10

$587,535

$228,239

$ 116,000

$45,200

San Francisco, CA

12.6

27.8

33

2

$656,277

$286,329

$ 128,000

$58,000

Detroit, MI

3.0

8.0

96

60

$453,958

$164,167

$87,400

$32,300

Riverside, CA

8.6

17.5

65

11

$367,681

$177,581

$72,300

$35,300

Phoenix, AZ

5.7

11.7

84

38

$393,648

$194,090

$77,500

$38,000

Seattle, WA

7.6

17.1

68

12

$529,317

$234,656

$ 103,200

$46,000

Minneapolis-St Paul, MN

4.6

11.1

93

39

$512,526

$209,175

$ 100,000

$41,000

San Diego, CA

11.0

22.2

40

3

$471,840

$234,123

$93,000

$46,100

St. Louis, MO

3.3

8.1

95

63

$443,217

$179,537

$88,000

$35,300

Tampa, FL

4.7

10.5

87

45

$360,353

$163,258

$71,000

$32,200

Baltimore, MD

4.6

11.2

91

42

$562,327

$229,242

$ 110,000

$45,000

Denver, CO

7.0

14.5

79

17

$495,133

$238,822

$98,000

$47,000

Pittsburgh, PA

3.1

8.1

96

63

$429,967

$162,840

$83,650

$32,000

Portland, OR

7.6

16.8

73

6

$456,201

$204,963

$89,700

$40,400

Charlotte, NC

4.0

9.5

89

51

$402,000

$172,054

$80,000

$34,000

Sacramento, CA

7.5

17.0

75

8

$459,278

$201,205

$90,000

$40,000

San Antonio, TX

4.0

8.4

93

63

$394,830

$184,231

$76,000

$36,300

Orlando, FL

5.4

10.8

87

43

$350,919

$177,219

$70,000

$35,000

Cincinnati, OH

3.3

8.5

96

61

$443,360

$171,656

$87,000

$33,600

Cleveland, OH

3.1

8.0

96

66

$403,868

$164,204

$81,300

$32,000

Kansas City, MO

3.4

8.2

96

65

$443,150

$187,805

$87,000

$36,650

Las Vegas, NV

5.5

11.4

88

38

$372,010

$182,161

$74,000

$35,800

Columbus, OH

3.6

8.3

95

62

$440,449

$192,054

$85,000

$37,440

Indianapolis, IN

3.1

7.5

96

71

$425,609

$176,828

$83,800

$35,000

San Jose, CA

14.0

30.7

22

1

$693,211

$369,555

$ 136,200

$62,200

Austin, TX

5.1

11.1

87

42

$497,165

$233,188

$99,000

$45,600

[Souce: Zillow®]

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Renting Twice as Expensive as Buying, Says Zillow Report

(c) Can Stock Photo (Jeff Sorg, OnlineEd) –  With prices rising and inventories falling, it’s now more affordable to buy a home in most US metro areas than it was 15 years ago, according to a report by Zillow analyzing third quarter income and home value data.

According to Zillow’s analysis of trends, on average, homeowners making the nation’s median income and purchasing the typical home spend 15.3 percent of their income on their monthly house payment, down from the historical norm of 22.1 percent during the pre-bubble period from 1985 to 1999. On average, U.S. renters spent 29.9 percent of their monthly income on rent in the third quarter of 2014, up from 24.9 percent historically.

“Despite rising home values, homeownership remains very accessible for buyers that can scrape together a down payment – even if that down payment is relatively modest – find a home to buy and secure financing,” said Zillow Chief Economist Dr. Stan Humphries. “But what keeps me up at night is the fact that it still remains so difficult for so many potential buyers to make those particular stars align, largely because renting is so unaffordable these days. It’s very difficult to come up with a down payment when so much of your monthly paycheck – especially on an entry-level salary – is going to your landlord instead of into your savings. Buying conditions are getting better every day, and in time the allure of fixed housing payments and building wealth through home equity will draw more buyers out of rentals and into homeownership.”

With affordable prices and new products like Fannie Mae’s 3% downpayment program for first time buyers, many experts expect that Millennials (aged 23-34) will overtake Generation X as the biggest group of U.S. homebuyers by the end of 2015.

Metro Area

 Q3 2014 Median Household Income

 Zillow Home Value Index

(Q3 2014)

% of monthly income devoted to mortgage payments

(Q3 2014)

% of monthly income devoted to mortgage payment for first-time homebuyers

(Q3 2014)

% of monthly income devoted to rent

(Q3 2014)

United States

$        53,620

$        176,500

15.3%

17.4%

29.9%

New York, NY

$        69,337

$        381,600

25.6%

30.6%

40.5%

Los Angeles, CA

$        60,650

$        531,000

40.8%

50.7%

47.9%

Chicago, IL

$        62,652

$        188,200

14.0%

16.2%

31.5%

Dallas, TX

$        61,310

$        148,400

11.3%

14.5%

27.7%

Philadelphia, PA

$        64,823

$        202,700

14.6%

18.1%

28.8%

Houston, TX

$        59,953

$        150,300

11.7%

15.0%

29.4%

Washington, DC

$        92,610

$        359,300

18.1%

24.0%

27.1%

Miami, FL

$        47,896

$        205,200

19.9%

21.2%

44.5%

Atlanta, GA

$        59,927

$        151,900

11.8%

15.2%

24.1%

Boston, MA

$        75,059

$        362,700

22.5%

26.3%

34.1%

San Francisco, CA

$        77,409

$        689,900

41.5%

43.3%

45.9%

Detroit, MI

$        52,694

$        113,500

10.0%

10.6%

24.1%

Riverside, CA

$        54,085

$        277,900

23.9%

28.8%

36.4%

Phoenix, AZ

$        53,487

$        193,700

16.9%

20.9%

27.3%

Seattle, WA

$        70,352

$        333,700

22.1%

27.3%

30.8%

Minneapolis, MN

$        69,569

$        213,100

14.3%

17.7%

26.1%

San Diego, CA

$        63,607

$        466,100

34.1%

42.9%

42.5%

St. Louis, MO

$        54,746

$        129,100

11.0%

12.5%

24.1%

Tampa, FL

$        46,050

$        145,400

14.7%

14.7%

32.4%

Baltimore, MD

$        72,010

$        241,800

15.6%

19.0%

28.5%

Denver, CO

$        64,120

$        271,200

19.7%

25.4%

32.9%

Pittsburgh, PA

$        51,668

$        123,800

11.2%

11.7%

26.6%

Portland, OR

$        60,071

$        274,100

21.2%

28.3%

30.5%

Sacramento, CA

$        59,161

$        325,800

25.6%

31.1%

32.2%

San Antonio, TX

$        51,884

$        144,300

12.9%

15.1%

29.6%

Orlando, FL

$        48,905

$        168,100

16.0%

19.7%

32.1%

Cincinnati, OH

$        55,093

$        135,900

11.5%

13.9%

26.0%

Cleveland, OH

$        49,842

$        120,600

11.3%

13.9%

27.7%

Kansas City, MO

$        58,212

$        137,400

11.0%

13.2%

24.2%

Las Vegas, NV

$        51,609

$        181,600

16.4%

19.3%

27.5%

San Jose, CA

$        99,230

$        813,500

38.2%

43.7%

37.9%

Columbus, OH

$        55,836

$        144,300

12.0%

14.1%

27.0%

Charlotte, NC

$        55,332

$        155,900

13.1%

15.3%

26.3%

Indianapolis, IN

$        55,238

$        128,100

10.8%

13.5%

25.8%

Source: Zillow

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

  This article was published on December 10, 2014. All information contained in this posting is deemed correct and current as of this date, but is not guaranteed by the author and may have been obtained by third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

AEI’s International Center on Housing Risk Releases First-Time Buyer Mortgage Share Index (FBMSI)

(c) Can Stock Photo(Jeff Sorg, OnlineEd) –  Stephen Oliner and Edward Pinto, codirectors of the American Enterprise Institute’s (AEI’s) International Center on Housing Risk, announced the inaugural release of the First-Time Buyer Mortgage Share Index (FBMSI), a new objective and transparent measure of the share of mortgages going to first-time buyers. They also announced an index to measure the risk of those loans, the First-Time Buyer Mortgage Risk Index (FBMRI).

The Agency FBMSI (which measures mortgages guaranteed by government agencies) averaged 52 percent over the 12 months ending October 2014. The Combined FBMSI (which includes both government-guaranteed and private-sector mortgages) averaged an estimated 46 percent over the 12 months ending October 2014.

“Discussions about homeownership and credit availability are hampered when not grounded in good measurements of loan availability and risk,” said Pinto. “We developed these new tools to provide accurate information to help inform the conversation.”

The FBMSI is the first time the national first-time buyer share has been calculated using a nearly complete dataset with minimal opportunity for sample error. This is in contrast to the 2014 survey conducted by the National Association of Realtors (NAR), which was based on responses constituting only 0.2 percent of all purchase loans originated during the 12 month survey period and was voluntary, with responses received from only 9 percent of those mailed the 127-question survey.

For the July 2013-June 2014 period covered by the NAR’s survey, the center’s Combined FBMSI had an average value of 45 percent, substantially higher than the NAR’s survey finding that first-time homebuyers constituted 36 percent of purchase loans used to buy a primary residence.

“It is not surprising that the NAR results, which are based on a small and non-random sample, provide an inaccurate picture of the importance of first-time home buyers,” said Oliner. “The FBMSI is as comprehensive as currently possible and will hopefully allow a discussion of the facts on this important issue.”

AEI’s First-Time Buyer Mortgage Risk Index (FBMRI) stood at 14.56 percent in October, up slightly from the average for the prior three months, but up nearly 1 percentage point from a year earlier. The FBMRI is about 3 percentage points higher than the composite National Mortgage Risk Index (NMRI) and about 6 percentage points higher than the repeat homebuyer NMRI.

The higher risk for the mortgages taken out by first-time buyers is largely due to risk layering. In October 2014, two-thirds of first-time buyer mortgages had a combined loan-to-value ratio of 95 percent or higher, and 96 percent had a 30-year term. Facing the combination of little money down and slow amortization, these buyers will have very little home equity for a number of years unless their house appreciates substantially. In addition, about one-fifth of first-time buyers taking out mortgages had a FICO score below 660, the traditional definition of subprime mortgages.

The FBMSI and FBMRI are objective and transparent measures of the first-time buyer share and the riskiness of first-time buyer mortgages, respectively, based on the millions of loans contained in National Mortgage Risk Index (NMRI) database developed by AEI’s International Center on Housing Risk. For more information about the FBMSI, FBMRI, and NMRI, please visit HousingRisk.org.

AEI’s International Center on Housing Risk updates the FBMSI monthly.

Click here for the FBMSI data.

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

  This article was published on December 9, 2014. All information contained in this posting is deemed correct and current as of this date, but is not guaranteed by the author and may have been obtained by third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.