If you’re a renter, think about the amount you write on that check every month. Is it inching toward 30 percent of your monthly income? According to a new report by Zillow, gone are the days when mortgage rates made home ownership prohibitively expensive and renting was the affordable option. They report that the average renter in the U.S. is spending 30 percent of their monthly earnings on housing, and Seattle renters spend a little more than 30 percent, according to the Puget Sound Business Journal. Owning a home can cut that percentage in half, as homeowners pay only about 15 percent of their monthly income on their mortgage. Historically, renters have paid about 25 percent of their income toward rent.
Rents in Seattle are up a staggering 21.5 percent over the past five years, and with incomes only having grown 10.4 percent over that same span, renters are increasingly burdened with monthly housing costs. With mortgage interest rates hovering around 4 percent, first-time buyers in the U.S. are only spending an average of 17.5 percent on housing, even with many only paying a 5 percent down payment. Zillow says that even if interest rates rose to 7 percent, buying a home would be more affordable than it has been historically.
So, if you are looking to save on monthly housing costs, start saving those pennies for a down payment! If you are interested in real estate in the Seattle area, contact your local agent today.