One of the numerous positives that comes out of owning a home is the ability to insulate yourself from the inevitable variations in rent as your mortgage provides a fixed cost for living.
“Income growth, housing costs and changes in the share of renter and owner-occupied households over the past five years in metropolitan statistical areas throughout the US” were recently reviewed by the National Association of Realtors (NAR)and documented in a study.
Avoid the Trap
In the study mentioned above, it shows that over the last five years the income of renters grew by only 11%, yet their rent rose 15%. These numbers reflect why it can be so hard for renters to save money in order to fund a down payment.
The standard homeowner can expect to spend 15% of their income on housing, whereas the typical renter within the United States spends about 30% of their income on housing.
Also noted in the study is the fact that in metro areas, the income percentage that is spent on housing is even more. For example, in Boston, MA the typical renter spends almost 65% of their monthly income on housing and in San Francisco, CA the average renter spends 59% of their monthly income on housing.
Homebuyers who purchased their home over the same five-year period locked in their housing costs and were able to grow their net worth as home values have increased and their mortgage balances have gone down.
Options are Available
Perhaps, you have already saved enough to buy your first home
Recently HousingWirereported that Nomura’s analysts believe:
"It’s not that Millennials and other potential homebuyers aren’t qualified in terms of their credit scores or in how much they have saved for their down payment.
It’s that they thinkthey’re not qualified or they think that they don’t have a big enough down payment.” (emphasis added)
Bear in mind that, as we’ve been showing lately, 36% of Millennials put down less than 5% and 60% put less than 20% down. You might be closer to purchasing than you think!
At the end of the Day
Guard yourself against getting trapped in the renter’s snare. Contact us, or a mortgage professional in your area, and have them help you explore all your options.
Avoid the Trap
In the study mentioned above, it shows that over the last five years the income of renters grew by only 11%, yet their rent rose 15%. These numbers reflect why it can be so hard for renters to save money in order to fund a down payment.
The standard homeowner can expect to spend 15% of their income on housing, whereas the typical renter within the United States spends about 30% of their income on housing.
Also noted in the study is the fact that in metro areas, the income percentage that is spent on housing is even more. For example, in Boston, MA the typical renter spends almost 65% of their monthly income on housing and in San Francisco, CA the average renter spends 59% of their monthly income on housing.
Homebuyers who purchased their home over the same five-year period locked in their housing costs and were able to grow their net worth as home values have increased and their mortgage balances have gone down.
Options are Available
Perhaps, you have already saved enough to buy your first home
Recently HousingWirereported that Nomura’s analysts believe:
"It’s not that Millennials and other potential homebuyers aren’t qualified in terms of their credit scores or in how much they have saved for their down payment.
It’s that they thinkthey’re not qualified or they think that they don’t have a big enough down payment.” (emphasis added)
Bear in mind that, as we’ve been showing lately, 36% of Millennials put down less than 5% and 60% put less than 20% down. You might be closer to purchasing than you think!
At the end of the Day
Guard yourself against getting trapped in the renter’s snare. Contact us, or a mortgage professional in your area, and have them help you explore all your options.