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HOMEOWNERSHIP AFFORDABILITY IMPROVES FOR LOW-INCOME HOUSEHOLDS IN SOUTHEAST, STUDY SHOWS

 HOMEOWNERSHIP AFFORDABILITY IMPROVES
 FOR LOW-INCOME HOUSEHOLDS IN SOUTHEAST, STUDY SHOWS
 ATLANTA, Jan. 17 /PRNewswire/ -- Buying and paying for a home has become easier in general for low-income families in the Southeast, but it still remains difficult for poor families living in larger metropolitan areas, according to a new study by the Federal Home Loan Bank of Atlanta.
 The study, which analyzes homeownership affordability in 34 metropolitan areas in the Southeast, compares the prices of houses actually available to low-income families with the amount that these families can afford to pay. (Tables summarizing the results for the 34 metropolitan areas follow.)
 "More low-income families can afford to buy a house today than a year ago," said Richard Fritz, the bank's senior economist. "Larger urban areas, including Atlanta, Birmingham, Norfolk, and Washington, D.C., tend to be less affordable for low-income home buyers than medium-sized and smaller cities. However, there are exceptions, such as Charlotte, Richmond, and Orlando, where low-income families can more readily afford to buy available homes."
 Fritz said that decreasing mortgage rates in the past several months have tended to improve housing affordability. The bank's study deals primarily with income and price variables, but mortgage rates are also important, he said.
 Low-income families, for purposes of the bank's study, were defined as those earning 80 percent or less of each area's median household income, and the price these families can afford to pay for a house is estimated at approximately two-and-a-half times their annual income. The housing available to low-income families includes those homes which are priced at 80 percent or less of each area's median house price.
 The bank's study focuses solely on the lower end of the real estate market. Other commonly used housing affordability indexes exceed the indexes produced by the bank's model because they include higher-income families and higher-priced homes, resulting in an overstatement of affordability for families at lower income levels.
 The new study uses an index for each city studied. An index lower than 100 for a given city indicates that homes available to low-income families in that city cost more than they can afford to pay.
 The bank's study adjusts both median income and median home prices for lower income levels, whereas most other analyses include moderate- and higher-income families in their calculations.
 The affordability study also assumes a more realistic 5 percent down payment ratio, where other researchers assume a 20-percent down payment, which low-income borrowers can rarely afford.
 In considering borrowers' "other debt" ratio (debt obligations after mortgage, such as auto loans and credit cards), the bank's study shows this is typically higher for low-income home buyers that the 8 percent of income that lenders generally look for. A higher debt ratio reduces a family's affordability level.
 "This study is a part of our ongoing effort to identify and develop solutions for housing market pressures that affect low-income families," Fritz said.
 The Federal Home Loan Bank System was established in 1932 to offer credit at competitive rates to support economical home financing. One of 12 district banks in the Federal Home Loan Bank System, the Federal Home Loan Bank of Atlanta is a $17 billion reserve credit bank that provides low-cost financing and other banking services to its nearly 600 member financial institutions that offer housing finance to consumers in Alabama, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, and the District of Columbia.
 LOW-INCOME HOMEOWNER AFFORDABILITY INDEX
 Mid-1991
 Selected Metropolitan Areas
 LOW-
 LOW- INCOME
 ANNUAL INCOME AFFORD- AFFORD-
 MORTGAGE LOW- HOME ABLE ABILITY
 STATE MSA RATE INCOME(a)PRICE(b) PRICE INDEX
 Alabama Birmingham 9.56 $25,520 $67,520 $63,273 94
 Mobile 9.44 24,160 47,880 60,603 127
 Montgomery 9.81 25,680 58,760 62,368 106
 District of
 Columbia Washington 9.01 45,840 121,880 119,279 98
 Florida Bradenton 9.58 26,480 67,232 65,592 98
 Daytona Beach 9.20 24,800 53,056 63,497 120
 Ft. Lauderdale 9.32 33,760 76,480 85,557 112
 Ft. Myers 9.39 27,360 66,144 68,923 104
 Ft. Pierce 9.32 28,480 64,560 72,158 112
 Ft. Walton Bch. 9.74 27,360 56,240 66,869 119
 Gainesville 10.05 28,080 59,264 66,825 113
 Jacksonville 9.72 29,040 60,080 70,996 118
 Lakeland 9.49 24,160 52,736 60,340 114
 Melbourne 9.50 30,400 58,160 75,796 130
 Miami 9.68 30,400 75,152 74,627 99
 Ocala 9.54 21,120 44,304 52,451 118
 Orlando 9.39 31,120 68,512 78,312 114
 Pensacola 9.69 24,800 49,952 60,828 122
 Sarasota 8.89 29,440 71,312 77,416 109
 Tallahassee 9.52 27,200 66,336 67,700 102
 Tampa 9.71 27,040 55,824 66,160 119
 W. Palm Beach 9.31 34,800 89,888 88,217 98
 Georgia Atlanta 9.60 35,280 105,210 87,230 83
 Augusta 9.76 28,160 80,302 68,705 86
 Columbus 9.40 24,560 52,482 61,820 118
 Maryland Baltimore 9.57 34,800 84,680 86,242 102
 North
 Carolina Charlotte 9.66 32,160 79,120 79,133 100
 Greensboro 9.50 29,280 89,017 73,028 82
 Raleigh 9.01 34,960 101,418 91,061 90
 South
 Carolina Charleston 9.68 26,480 62,720 65,029 104
 Columbia 9.81 31,760 62,560 77,153 123
 Greenville 9.62 27,120 58,920 66,895 114
 Virginia Norfolk 9.28 29,840 82,424 75,792 92
 Richmond 9.23 35,840 91,134 91,443 100
 (a) Income equals 80 percent of median annual income for MSA
 (b) Price equals 80 percent of median price for MSA
 LOWER-INCOME HOMEOWNER AFFORDABILITY INDEX
 Selected Metropolitan Areas
 STATE MSA 1987 1988 1989 1990 Mid-1991
 Alabama Birmingham 93 92 88 93 94
 Mobile 121 138 117 123 127
 Montgomery 103 108 85 110 106
 District of
 Columbia Washington 100 91 83 88 98
 Florida Bradenton N/A 107 95 101 98
 Daytona Beach 103 104 101 105 120
 Ft. Lauderdale 106 111 104 100 112
 Ft. Myers 119 123 110 99 104
 Ft. Pierce N/A 125 114 96 112
 Ft. Walton Bch. 100 113 106 109 119
 Gainesville 120 117 114 108 113
 Jacksonville 115 116 110 109 118
 Lakeland 111 98 107 112 114
 Melbourne 120 115 116 115 130
 Miami 96 97 91 95 99
 Ocala 109 106 102 110 118
 Orlando 104 104 103 108 114
 Pensacola 136 151 136 110 122
 Sarasota N/A 97 92 94 109
 Tallahassee 106 98 93 99 102
 Tampa 106 109 99 109 119
 W. Palm Beach 82 92 88 85 98
 Georgia Atlanta 73 71 68 77 83
 Augusta --- --- --- --- 86
 Columbus --- --- --- --- 118
 Maryland Baltimore 101 97 92 93 102
 North
 Carolina Charlotte 101 100 93 99 100
 Greensboro 79 77 73 78 82
 Raleigh 85 93 91 91 90
 South
 Carolina Charleston 95 98 98 104 104
 Columbia 116 121 116 119 123
 Greenville 110 112 102 100 114
 Virginia Norfolk 82 84 84 90 92
 Richmond 98 87 85 87 100
 -0- 1/17/92
 /CONTACT: Rebecca A. Vail, 404-888-8119, or James J. Wallace, 404-888-5593, both of the Federal Home Loan Bank of Atlanta/ CO: Federal Home Loan Bank of Atlanta ST: Georgia IN: FIN SU:


BR-BN -- AT007 -- 1000 01/17/92 12:47 EST
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