HOUSING NEWS REPORT
BY ATTOM DATA SOLUTIONS
The Rental Crush
AN EXCERPT FROM HOUSING NEWS REPORT ARTICLE BY ATTOM DATA SOLUTIONS.
by Peter Miller, Staff Writer, ATTOM Data Solutions
hile the inventory shortage represents a lack of supply
Q3 2017, up from only 21 percent of those same counties below historic affordability averages a year earlier. And while the usu- al suspects in coastal California and New York were part of that 45 percent, also in that 45 percent were counties in Houston, Denver, Dallas, Austin and Nashville. Not only is ownership off the table for many potential buyers, so is renting. Freddie Mac reports that “as of 2016, 15 percent of young adults aged 25-35 were living in their parents’ home, which is five percentage points higher than in 2000.” Living at home with Mom and Dad is hardly ideal but it could be worse. Rental costs are so high in hot markets that we’re beginning to see the emer- gence of people who are employed but lack the income to rent, the working homeless. A December report by Axios found that the working homeless can now be identified in such metro areas as Washington, Boston, New York, Seattle, and San Francisco. The efforts to convert renters into owners is now floundering. The National Association of Realtors reports that in 2017 first-time buyers represented just 34 percent of market, down from the 39 percent long-term norm. Many renters could reduce monthly costs with ownership. A January report from ATTOMData Solutions found that in 240 of 447 U.S. counties a medi- an-priced home was actually more affordable than renting a three-bedroom property. •
Without savings, an auto repair or small medical emergency can turn into overdrafts and missed payments that lead to lower credit scores and higher borrowing costs, making a home pur- chase impossible. Equally problematic on the affordability front are soaring home prices in highly desirable mar- kets such as San Francisco. “The median SF house sales price in 2017 was $1,420,000 (up from $1,325,000 in 2016), and for condos, it was $1,150,000 (up from $1,095,000),” says the Paragon Real Estate Group. High-priced markets such as San Francisco are, logically, most likely to hit affordability ceilings that may constrain demand, but the affordabil- ity crunch is also spreading to some surprising places. Homes were less affordable than historic affordability av- erages in 45 percent of 406 U.S. counties analyzed by ATTOM Data Solutions in
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there’s also a smaller but visible lack of demand: many potential buyers simply do not have the dollars and credit needed to purchase. If more buyers enter the market then one might expect even higher prices but such a break- through is unlikely in 2018. According to Harvard’s Joint Center for Housing Studies some 21 million households now devote at least 30 percent of their income to rent and the result is a growing inability to save, not just for a down payment but to save in general. Nearly seven out of ten con- sumers have less than $1,000 in savings according to a 2016 study by GoBankin- gRates.com. In addition, student debt – a huge monthly cost for many potential homebuyers – amounted to $1.36 trillion at the end of the third quarter, up more than $1 trillion since 2004.
BUY OR RENT IN 2018? More Affordable to Buy or Rent in 2018 Buy Rent
You can read the full article in the February issue of the Housing News Report.
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