Home ownership in the United States has slowly fallen in recent years to currently its lowest level since 1965 but new research from the National Association of Realtors suggests that could be halted.
The research shows that there are many affordable metro areas and a large segment of current people who rent their home earn enough income to qualify to buy a property.
NAR reviewed employment growth, household income and qualifying income levels in nearly100 of the largest metropolitan statistical areas across the country to determine which areas with employment gains above the recent national average also have the largest share of renters who can currently afford to buy a home.
Of the top 10 metro areas with the highest share of renters who earn enough to buy, nine were either in the South or Midwest, including three cities in Ohio.
Lawrence Yun, NAR chief economist, pointed out that there has been a significant increase in renter households both among young adults and those who lost their home since the economic downturn, especially in metro areas that have seen robust job creation and a resulting influx of new residents.
‘Even in a time of expanding home sales, steady job growth and historically low mortgage rates, the homeownership rate recently tumbled to its lowest level in over five decades as many renters struggle to juggle escalating rents without commensurate income gains,’ he said.
‘However, this new study reveals that there are several affordable, middle tier markets with solid job gains and a large segment of renters who earn enough to buy,’ he added.
The top 10 metro areas highlighted in NAR’s study were all outside of the West Coast and each had a share of renters who qualify to buy that was well above the national level of 28%.
Top is Toledo in Ohio and Little Rock in Arkansas both with 46%, followed by Dayton in Ohio at 44%, Lakeland in Florida, St. Louis in Missouri and Columbia in South Carolina all at 41%, Atlanta at 40% and then Columbus in Ohio, Tampa in Florida and Ogden in Utah all at 38%.
According to Yun, it’s no surprise that many of the markets with the most renters qualified to buy are in the Midwest and South. The median existing home sales price in these two regions continue to be lower than the Northeast and West, and while many of these areas were slower to recover from the recession, improvements in their local labour markets in the past year have pushed their hiring levels to at or above the national average growth rate.
‘Overall housing affordability and local job market strength play a pivotal role in a renter’s decision on whether to buy a home or sign another lease. The good news is that other recent NAR survey data shows that those residing in the two regions were the most likely to say that now is a good time to purchase a home,’ Yun explained.
‘With mortgage rates now at their all-time low, these identified markets are well suited for the many renters financially capable and interested in taking advantage of the stability and wealth building benefits owning a home can provide,’ he added.
