In contrast, buyers pay 15.1% of their income towards mortgage payments, which is still less than what they spent historically.
Advertisement
That’s because in Denver, it takes a whopping 35 percent of a person’s monthly income to afford rent in the city, way above the national average of paying less than a quarter of monthly income for rent.
In Charlotte, which is experiencing an apartment boom, renters paid an average of 26.8 percent of their monthly incomes on housing in the second quarter, a report Thursday from real estate data firm Zillow showed. In San Jose, renters and buyers should each plan to put about 42% of their incomes towards housing.
Nationally, rental affordability worsened over the last year, Zillow reported.
At a time when interest rates are still low, that $2,247 would be more than enough to cover the monthly mortgage payments on a $350,000 house – assuming the buyer could scrape up the $17,500 needed for a 5 percent down payment. A 30-year fixed rate mortgage rate is now about 4 percent.
Bay area buyers, though, spent slightly less of their income than renters in Orlando and much less than those in South Florida.
“There are good reasons to rent temporarily – when you move to a new city, for example – but from an affordability perspective, rents are insane right now”, said Svenja Gudell, Zillow’s chief economist. High rents make it hard to save for a down payment, however. If you can possibly come up with a down payment, then it’s a good time to buy a home and start putting your money toward a mortgage, ‘ added Gudell.
Advertisement
Not only are some renters not able to save for a down payment on a mortgage, but some who are overdrawn are even cutting back on healthcare, according to Zillow. “Rents will likely keep rising at roughly their current pace for at least the next few years, which will lead to a continued affordability crunch unless wage growth significantly improves”.
