These markets are bad news for first-time buyers

by Steve Randall24 Jan 2018
The ability of renters to become first-time homebuyers in some markets is getting worse.

With home prices increasing along with mortgage rates, renters could use a break on rents to help with savings for a future down payment; even if that future is some way off.

But in high-rent markets such as Oakland, CA and Cincinnati, renters of single-family homes are paying out around half of their income on rent, residential real estate investment firm HomeUnion says.

It has listed the ten most and least affordable rental markets nationwide.

"Low affordability negatively impacts all renters in the Bay Area, Denver, Southern California and Washington, D.C., because of strong local job market conditions, intense demand for rental properties, and high mortgage costs for owner-occupied housing," explains Steve Hovland, director of research for HomeUnion.

The most affordable rental market is Chicago with a renter needing 19.5% of the median income to rent a median single-family home.

“It's the only metro in the country where typical renters spend less than 20% of their annual income on housing,” says Hovland. “Emerging neighborhoods like Logan Square and other West Side locations have become increasingly popular areas for young professionals, making Chicago an excellent choice for millennials.”

The 10 most affordable rental markets in the nation:
Metro Annual SFR Rent Annual Income Rent to Income
Chicago $19,956 $102,180 19.5%
Charlotte, N.C. $15,792 $62,064 25.4%
Minneapolis $20,580 $77,568 26.5%
Detroit $14,412 $51,900 27.8%
Atlanta $16,980 $59,712 28.4%
St. Louis $13,584 $47,268 28.7%
Raleigh, N.C. $18,480 $63,180 29.2%
Houston $19,404 $60,912 31.9%
Oklahoma City $14,088 $44,100 31.9%
Tampa $18,024 $55,632 32.4%

The 10 most expensive rental markets in the nation:
Metro Annual SFR Rent Annual Income Rent to Income
Oakland, Calif. $37,524 $73,284 51.2%
Cincinnati $15,768 $32,100 49.1%
Salt Lake City $19,500 $43,644 44.7%
Orange County, Calif. $38,616 $87,276 44.2%
Portland, Ore. $24,132 $54,816 44.0%
San Francisco $53,328 $121,440 43.9%
Washington, D.C. $27,276 $68,136 40.0%
Denver $26,460 $66,756 39.6%
Cleveland $14,988 $38,028 39.4%
San Diego $33,444 $85,872 38.9%

Sources: HomeUnion Research Services, MPF Research, a division of RealPage

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