Did you know that nearly 10 million more renter households had the income to qualify to buy a home in 2011 versus 2005?
Many factors have increased the number of renter households qualified to purchase a home in 2011 versus 2000 and 2005: 1) incomes have increased, 2) population has grown, 3) mortgage rates are lower, and 4) prices have fallen since 2005.
The tables below show the data underlying the change in required income. Because of lower home prices and mortgage rates, qualifying income required to purchase a median priced home has fallen from $56,600 in 2005 and $40,300 in 2000 to $33,100 in 2011.
Finally, based on all of these factors, we see that while 33 percent of renters qualified to buy the median priced home in 2000 and 24 percent of renters qualified to buy the median priced home in 2005, 47 percent of renters would qualify in 2011[1]. Translating these numbers into households, 7.7 million renters qualified to purchase the median priced home in 2005 while in 2010, 15 million renter households qualify.
These calculations assume that potential buyers meet credit qualifications and have sufficient cash on hand to close a transaction. Lending standards, credit quality, and access to funds will affect the number of households who will be able to buy a home.
[1] This calculation assumes that income distribution in 2011 is the same as it was in 2010.
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