According to an article published on February 1, 2011 in DSNews, a study done by Movoto.com, a real estate site based in California, more than half of American families can afford to buy a new home based on income levels and listing prices. The following is an excerpt from the article which gives insight on the reasoning behind this statistic:
“While the site’s user search statistics show high interest in affordable price ranges, the company says buyers find it difficult to purchase short sales and foreclosures and banks are still reluctant to lend.
With 2010’s median family income at $64,400, at least 50 percent of families could afford to buy a home priced at $150,000 or higher, according to Movoto.com.
A person with an annual salary of $64,400 could reasonably afford a $215,000 home with a 5 percent down payment, an interest rate of 5 percent on a 30 year mortgage, and property taxes at 1.25 percent, assuming a monthly mortgage payment to monthly income ratio rate of 25 percent, the company explained in a statement.
However, these numbers do not add up to more home sales.
‘According to the numbers, buyer interest, affordability, and home price inventory have aligned,’ said Henry Shao, CEO of Movoto. ‘Median income levels can support mortgages at the most readily available housing prices, but we have yet to see a corresponding jump in sales.'”