A Local Look: Affordability for Renters, Buyers

Sharing an informative article from our company website Sun Pacific Mortgage and Real Estate, which was written By Satinder Haer, of Zillow. (Interesting graphic at end showing How much money stands between you and a home.)

With the real estate market growing faster than incomes since the recession, affordability is an issue across the country. Is it more affordable to rent or own? At any time, the answer depends on a number of complex, shifting factors: local real estate market conditions, mortgage interest rates and your personal financial situation, among others. However, the data continues to suggest that on a monthly basis, buying remains a better bargain than renting.

Renting is less affordable than ever before while purchase affordability is at an all-time high. Historical data show from 1985 to 2000, renters could expect to spend about 24.5 percent of their monthly income on rent. In the third quarter of 2015, renters spend roughly 30.2 percent of their monthly income on rent—the highest percentage on record. Homeowners on the other hand, are faring even better than they were before 2000. Historically, homeowners spent approximately 21.3 percent of their monthly income on their mortgage payments. Comparatively, Q3 2015 buyers can expect to put just 15 percent of their monthly income toward a mortgage. Renters are forced to spend more of their paycheck on rent than they did before the real estate bubble and bust while homeowners spend less.

California