Nearly half of the DC-area’s older millennial renters could afford to buy, according to a new study from Harvard’s Joint Center for Housing Studies.
The study analyzed the country’s 85 most populous metro areas and found that the DC region has a relatively high rate of renters aged 25-34 who can afford to own: 44 percent. On average, this group makes $65,952 a year.
In New York’s metro area, the share of older millenial renters who can buy is 30.3 percent. In San Francisco, it’s 17.1 percent for a group that takes home an average of $62,908 annually.
The study looked at the DC statistical area, which is worth noting because it takes into account such a wide swath of the region. New York and San Francisco’s metro areas are not quite as expansive.
The homeownership rates in the DC area for the same age group clocked in at 34 percent. The overall homeownership rate in the region is 63.1, according to the study.
The study used measures of affordability including mortgage payments, home insurance and taxes, as well as a 5 percent down payment and a 30-year fixed-rate mortgage with interest rates based on the 2013 interest rate average on a median-priced home in that metro. The median home price in the DC metro area for that year was $378,050, and the center calculated monthly homeownership costs at $2,129.
So why aren’t more of the renting group buying? The answer comes down to more than debt, according to CityLab, and may be related to a combination of relatively poorer credit compared to other buyers, the presence of institutional investors and the prevalence of all-cash purchases. But whatever the cause, the trend may explain why local developers are investing so heavily in high-end rentals appealing to millennials.
This article originally published at http://dc.urbanturf.com/articles/blog/nearly_half_of_dc_young_renters_could_afford_to_buy_instead/8835
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