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Affordability Falling as Permits Lag Growth
Friday, March 27, 2015
The old maxim that a household rents only until it can
afford to buy a home is apparently being stood on its head in a lot of housing
markets. A study published on Friday by
Zillow says that "rental affordability is as bad as it's ever been." Nationally, in fact, they found it is
consuming nearly twice as much of a family's monthly income as would
homeownership and in many markets that ratio is even higher.
In the fourth quarter of 2014 Zillow found that, in the U.S.
as a whole, households are spending 30.1 percent of their income for a rental
while, with a Zillow Home Value Index (ZHVI) of $178,700 and historically low
interest rates they would spend 15.3 percent on an owned home. According to Zillow's
February Real Estate Market Reports, the ZHVI above reflects a 4.9 percent
year-over-year increase while "Zillow rents" rose 3.4 percent nationally to
$1,355. Value Index should be interpreted as analogous
to mean or median figures.
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