The National Association of Realtors says the number of renters who’re in a position to buy their first home has increased in the last two years. However, it says homeownership remains difficult for many to attain due to the need for a large down payment.
In its latest Economists’ Outlook blog post, the NAR said 38% of renters can now afford a home, up from 33% in 2018. But the problem is they’ll still need to save up for 13 years for that pesky 10% down payment.
Boston Real Estate Market
Some of the metro areas seeing the highest percentage of renter households now able to afford to buy a home in the third quarter.
While the home purchase has become more affordable, monthly mortgage payments and down payments have not. As of the third quarter, a renter with a family income of $49,242 or below would not be able to afford a typical single-family home valued at $313,500, according to NAR’s analysis. The mortgage payment would account for 29% of income, which is above the 25% threshold that most financial experts consider affordable.
Also, a renter will need about $30,000 for a 10% down payment, requiring an estimated 13 years of saving.
Still, some help is available with the FHA and other lending programs offering 3% loans to first-time buyers that qualify. Several other loan programs offer down payment assistance that real estate pros can share with their customers who are looking to buy but are unable to save for the down payment
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Updated: Boston real estate for sale 2020
Younger renters and homeownership
In the recent National Housing Survey, 76% of younger renters think owning a single-family home or condo makes more sense compared to renting. One of the reasons cited in the report they think owning is a smarter move because you’re protected against rent increases and owning a home is a good investment in the long term.
Here are a few other items noted in the report:
* When forced to choose, 59% of younger renters think owning makes more sense while 41% think renting makes more sense for lifestyle reasons.
* Younger renters most frequently cite insufficient credit history and difficulty with affording a down payment as their biggest obstacles in obtaining a mortgage.