TheMReport

TH E M R EP O RT | 49 O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA Low-Income Homeowners Have Common Ground with Renters Thanks to rising prices and tight inventory, low- income homeowners are just as burdened by housing costs as their renting counterparts. S ome may think owning a home means having more financial stability than renting, but a re- cent report from Urban Institute says low-income homeowners are just as burdened by hous- ing costs as renters. Housing shortages have sparked increas- ing home prices over the last few months, and a higher share of homeowners and renters are facing affordability issues, with a quarter of renters spending at least half of their income on rental housing compared to the 10 percent of homeowners. The generally lower income of renters normally explains this, but when Urban Institute stud - ied the numbers, they found that homeownership doesn't protect low-income homeowners. Eight percent of homeown - ers have extremely low income, meaning 30 percent or less of area median income (AMI). Seven percent of homeowners have low income, or 31-50 per - cent less of area median income. Ninety-two percent of cost- burdened renters and 72 percent of cost-burdened homeowners fit into these income groups. Though low-income home - owners and renters have similar rates of cost burden, there is a significant difference in the inhabitants. Poor, severely bur- dened homeowners tend to be elderly, while severely burdened renters tend to have young families. "In the lowest AMI group, 37 percent have an elderly house - hold head, and 57 percent have a child in their household," Urban Institute reported. "But cost-burdened homeowners are approximately twice as likely as cost-burdened renters to be elderly (54 percent compared to 27 per - cent), and renters are more likely to have at least one child under age 18 than homeowners (68 per - cent compared to 38 percent)." Renters certainly carry the majority of the severe housing cost burdens, but according to Urban Institutes data, low-income homeowners struggle as well. Higher cost burdens for elderly homeowners reflect their low retirement salary, but according to the Urban Institute, we need to understand more about this group and what kind of impact the severe cost burden has on them. Homebuying Sentiments Vary by Local Density Urban buyers are more transient, younger, and more likely to buy starter homes. U rban, rural, and suburban American homebuyers have "drastically different" profiles, according to results of the latest Modern Homebuyer Survey released by ValueInsured. Aside from agreeing on the importance of homeownership, the three groups vary greatly on most homebuying-related topics. The biggest differences lie with the urban homebuyer, who ValueInsured said is "younger, more transient, more likely to be a new immigrant, and—not surpris - ingly, due to higher housing costs in urban areas—plan[s] to buy with a significantly higher budget." According to the survey, the average urban homebuyer is about 38 years old—nearly a full decade younger than the average suburban and rural buyer. About 18 percent self-identify as a re - cent immigrant, compared to the 3 percent of suburban and rural buyers who say the same. Additionally, urban buyers are much more likely to buy a starter home than their suburban and rural counterparts. While 31 percent of urban buyers plan to purchase one, just 13 percent of rural buyers and 12 percent of suburban buyers do. Budget is starkly different between homebuyer groups, too. Urban buyers have a median budget of $405,500 for a starter home, while rural and suburban buyers have budgets of $158,400 and $210,200, respectively. But demos and budgets aren't the only places where these buyers diverge, according to ValueInsured. "Differences are in how residents from different areas of density view homebuying," ValueInsured reported. "Urban homebuyers seem content with not looking for a 'forever home,' and instead see homebuying as serial investments. Suburban and most potently rural homebuyers appear less bullish about home- buying as a good investment; they are also much more likely to be concerned with the pros - pect of another housing crisis." While 77 percent of urban buyers believe buying a home in their area is a good investment, only 66 percent of suburban buyers do. Rural homebuyers feel even less that their neighborhood offers good investment opportu - nities, at just 58 percent. About 65 percent of urban homebuyers are also confident in the market, believing another housing crisis is not likely in their lifetime. Rural and subur - ban buyers, however, feel the chances are much higher; only 29 percent and 34 percent of these groups, respectively, have similar market confidence. With these sentiments, it's no surprise that most suburban buy - ers—71 percent—plan to stay in their homes at least seven years. Less than half of that number, or 35 percent, of urban buyers have plans to stay put that long.

• Cover