Recent research indicates that despite a grim looking housing market (high prices, low supply, uncertainties regarding the economy, etc.), consumers DO want to become homeowners.
A National Association of Home Builders’ recent survey points to the fact that more than half of those actively looking to buy for as long as three months were unsuccessful. Why? High prices.
A recent study by Zillow indicated that it now takes three years longer for most younger Americans, average age of 26 years, to live on their own than it did twenty years ago. In 2000, the average 26 year old was married and living with a spouse. Today, the average 26 year old is living with their family and/or a friend and/or a roommate. (New research by ATTOM Data Solutions corroborates Zillow’s research on this topic.) Why? Student debt and high prices.
New research by SmartAsset gives us a different perspective. SmartAsset looked at 100 markets and determined that certain markets can “help” renters become homeowners within a reasonable amount of time.
SmartAssei accounted for median home prices, median annual rents, effect income tax rates, closing costs in each city, etc. and then estimated the average amount of time it would take renters to save up enough to buy, assuming that renters would save 40% of their post-tax and post-rent annual income.
Here are the top five of ten cities where renters would have a more than decent chance of becoming homeowners in a decent amount of time:
According to the 2017 US Census, the median income in Toledo was $26,412. With a tax rate of 11.36% and annual rent of $8,100, renters would be left with $15,313. With a median home value of $78,400, renters saving 40% of their after tax/rent income would be able to be in their homes within 3 years and one month.
Median incomes after taxes and rent in Irving turn out to double those in Toledo at approximately $30,000. Median home values are $187,700 but higher median incomes help offset higher housing costs. Upfront housing costs turn out to be $41,015 with $3,475 in closing costs. It would take 3 years and four months for renters saving 40% of their after tax/rent income to buy in Irving.
Median incomes after taxes and rent come in at $22,953 in Columbus. Upfront costs on a median valued home come in at $33,715. It would take three years and 8 months for a renter to become a homeowner in Columbus assuming that renter saved 40% of her/his after tax/rent income.
Fort Wayne IN
Fort Wayne renters would take three years nine months to become homeowners. Median incomes post-tax/rent are $30,225 and the average home value is $117,900.
Both home values and incomes are very different in Detroit. Median home values come in at $50,200 with closing costs at $4,367. Post-tax/rent incomes come in at just under $10,000. (Startling, isn’t it.) It would take a renter saving 40% of his/her post-rent/tax income approximately three years and ten months to buy a home in Detroit.
Rounding out the top ten cities where renters would be able to become homeowners within a reasonable time frame are Memphis, Cleveland, Omaha, Garland TX and Fort Worth.
Thanks to HousingWire’s Maleesa Smith for source data.
Also read: https://timandjulieharris.com/2019/09/10/seniors-facing-no-fault-evictions-in-ca-fear-homelessness.html, https://timandjulieharris.com/2019/08/30/cities-where-its-getting-more-less-expensive-to-live-on-daily-basis.html, https://timandjulieharris.com/2019/09/19/76-of-buyers-found-their-home-on-their-phone.html