Last week’s “Moneywatch” article on CBSNews.com was a surefire attention grabber. It promised to reveal a single “must do” tip for first-time homebuyers. The main point covered familiar ground—but within the supporting information were some facts that could nudge some Weber, Davis and Salt Lake County renters into becoming first-time homebuyers.
Although the headlined “Don’t Buy a Home Without Doing This First” tip was good enough advice (“build your budget”), the details for how to accomplish that were hardly groundbreakers:
Experts advise holding mortgage payments to a maximum of 28% of gross income.
Budget for more than just the mortgage amount: allow for upkeep and extras, remembering that “rent is the most you will pay, but the mortgage payment is the least.”
Budget no more than three to five times annual earnings…etc.
Since it’s all but impossible for first-time homebuyers to land a home without first demonstrating to lenders that the purchase makes financial sense, serious prospective buyers would already be familiar with the need to lay out some budgetary groundwork.
On the other hand, some of the supporting information was data I haven’t seen elsewhere. First-time homeowner candidates may have been feeling the impact of what was revealed, but seeing the numerical proof could be decisive. There were two sobering pieces of data:
First, in 2017, renters nationwide spent an average of $2,000 more to keep a roof over their heads than they had in similar periods. The source is a research study based on a comparison with previous typical housing markets. Whereas the 2017 median U.S. rental required 29.1% of income, in earlier periods that percentage was just 25.8%.
Second, while renting a home continues to get pricier, current owners are experiencing the opposite. They are spending less on housing payments—about $3,300 less!
Weber, Davis and Salt Lake County renters may have suspected the first piece of news, but until now have had no way to confirm the second. CBSNews summed it up well: “It’s enough to make renters run to their nearest realtor.”
Thank you, CBSNews—I couldn’t have said it better!