A recent study from Porch has revealed that 61% of renters in the largest U.S. cities can’t afford to buy a home where they live.
When comparing median home prices in 260 metro areas to the income levels of renters who live there, the home improvement website found that homeownership is currently out of reach for renters in most markets. In 71% of the metros evaluated by Porch, median mortgage payments exceed 30% of the gross monthly incomes for renter households — a threshold deemed by many as the cutoff for an affordable-housing expenditure.
Essentially, even if renters in such metros saved up for a downpayment to buy a home, they’d still find themselves struggling to keep up with monthly payments after they’ve made their purchase.
In 13 of the metros evaluated by Porch, 90% or more of renters are priced out of the home-purchase market. Unsurprisingly, 10 of these 13 metros are in California, topped by Santa Cruz-Watsonville. Housing costs surpass 30% of gross income for a staggering 97% of renters in the Central Coast metro, dubiously followed by Los Angeles (95.7%), Santa Barbara-Santa Maria (94.2%) and San Jose (94.1%), all in the Golden State.
The three non-California metros where more than 90% of renters can’t afford to keep up with mortgage payments include Barnstable Town, Massachusetts (94%); Kahului-Wailuku-Lahaina, Hawaii (93%); and Boulder, Colorado (90%). Buyers in the first two metros pay a premium for their oceanside locales, while in the third, high prices are often traced to the city’s nascent but vibrant tech-based ecosystem.
Conversely, Porch found that many of the metros with the lowest shares of priced-out renters are former industrial towns in the Rust Belt and South. Johnstown, an old steel town nestled in west-central Pennsylvania, has the lowest share, with only 18.5% of renters unable to clear the 30% income cutoff. Also among the most affordable metros for renters to buy homes are Pine Bluff, Arkansas (where only 24.6% of renters are priced out); Abilene, Texas (27.6%); and Odessa, Texas (27.9%).
