Most studies on homeownership use median home prices and incomes to gauge affordability. Now, Urban Institute has released a new affordability study based on a new measure: the Housing Affordability for Renters Index (HARI).
HARI is meant to capture the range and distribution of incomes in a metro area and compare it to the range and distribution of home prices. Based on the local HARI index, 29.6 percent of DC-area renters can afford to buy homes.
"The Washington, DC, metropolitan area is 'severely unaffordable' by at least one traditional measure, but our index reveals that 30 percent of local renters can afford homes in the area, nearly double the 17 percent of national renters with incomes similar to those of DC homebuyers."
As for renters nationwide who move to the DC area, only 17.7 percent can afford to buy a home here if their income remains the same. The homeownership rate in the DC area is 62.2 percent.
Because the study uses regionwide data, maybe the lesson in the data is that would-be homebuyers would do well to expand their search area if home prices seem too steep. However, if a newly-released study by Freddie Mac is any indication, the perception of affordability is leading more and more renters to opt out of homeownership.
This article originally published at https://dc.urbanturf.com/articles/blog/one-third-of-dc-area-renters-could-afford-to-buy/13789.
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