What is Affordable?
Housing costs should not be more than 30-40% of your income
- Don’t forget to factor in the costs for
- Utilities
- Insurance (whether renters’ or owners’)
- And if you are an owner
- Real Estate taxes and
- An allowance for repairs and replacements
- When you don’t know the utilities and other costs, just stick with 30% of income as a rule of thumb for affordability.
What can Washington County Families Afford?
- Median income for a family of 4 is $61,500[1]
- Do the math, here is 30% of monthly income
|
% of median income for a family of four
|
30% of median
|
50% of median
|
80% of median
|
100% of median
|
120% of median
|
|
Median
|
18,450
|
30,750
|
49,200
|
61,500
|
73,800
|
|
Monthly income
|
1,538
|
2,563
|
4,100
|
5,125
|
6,150
|
|
30% of monthly income
|
461
|
769
|
1,230
|
1,538
|
1,845
|
- Who is already paying too much according to this 30% measure?[2]
|
% of median
|
less than 30%
|
30 to 50%
|
50 to 80%
|
80 to 100%
|
|
# households
|
5,808
|
5,115
|
8,930
|
2,489
|
|
Burden >30%
|
4,750
|
2,445
|
2,366
|
1,372
|
|
%
|
81.78%
|
47.80%
|
26.50%
|
55.12%
|
Rentals
51 of the 69 listings in the Herald Mail online on January 19, 2007 were for 3-bedroom units:
- There are NO rentals the families earning less than 30% of local median could afford
- There are two (2) offerings for the families earning between 30 and 50% of median income to consider
- The families earning between 50 and 80% of median have 37 possible choices and
- The families above 100% of median can rent anything we see currently advertised on the market
Ownership
But can the families in the 100-120% of median group afford to purchase a home?
- The most modestly priced 3-BR homes on public water and sewer in the present market start at $189,900.
- If our family borrows $190,000 for 30 years at 6.25% interest, their mortgage payment will be $750/month.
- Allowing $200/month for taxes and insurance and $250/month for utilities[3], the family’s gross housing cost is $1,200/month, and this budget figure does not have a monthly set aside for repairs or upgrades.
- Families at 80% to 100% of median income can just barely afford to buy starter homes originally built in the 1940s and 1950s where the presence of lead-based paint would be a concern for young parents.
- Newer starter homes built after 1960 tend to be priced at $250,000, driving the gross monthly expense before allowing for repairs to $1,510/month and leaving the families at 100% of median behind.
[1] Last HUD published table was issued on March 8, 2006.
[2] From HUD’s CHAS Data Book as of the 2000census
[3] Trash collection - $10, electric for hot water - $27, electric for cooking - $6, other electric - $28, natural gas - $115, and water and sewer in the area just outside the City of Hagerstown - $63
|
