EMBARGOED UNTIL: 10 A.M. EDT, SEPTEMBER 9, 1997 (TUESDAY) Public Information Office CB97-144 301-457-3030/301-457-3670 (fax) 301-457-4067 (TDD) e-mail: pio@census.gov Howard Savage 301-763-8165 Housing Affordability Addressed in Census Bureau Report The ability of the 40 million renters in the United States in 1993 to purchase a modestly priced home is the focus of a new report released today by the Commerce Department's Census Bureau. "Lower interest rates, smaller down-payments, and down-payment subsidies are traditionally considered key factors in the ability to buy a modestly priced home," said Howard Savage author of Who Can Afford to Buy a House in 1993? H121-97-1. A modestly priced home is one priced so that 25 percent of all owner-occupied homes in an area are below the price and 75 percent are above it. Interest rates, down-payments and subsidies had varying effects on the number of renters that could qualify for a mortgage: - Lower interest rates. A decrease of less than 3 percentage points, compared with the 1993 interest rate of 7.17 percent, had no significant effect on the number of renters who qualified for a mortgage on a modestly priced home. This is because renters typically have more than one obstacle to buying a house. They still may lack the cash for a down-payment or have outstanding debts. - Smaller down-payments. A decrease from a 5 percent to a 2.5 percent down-payment increases the number of renters who qualify for a mortgage by 1 percentage point. While a smaller down payment lowers the amount of cash required for purchase, it increases the amount of income needed as a result of the increased mortgage payment. - Down-payment subsidies. The report found that renters could increase their chances of owning a modestly priced home by 14 percentage points if they were to receive a subsidy of $5,000. A subsidy of $7,500 resulted in a 21 percentage point increase in the number of renters qualifying for a mortgage and a $10,000 subsidy would have increased the number of qualified renters by 25 percentage points. The subsidy can be used to lower the amount of mortgage required, to pay for closing costs or to pay off excess debt. The report combines financial considerations with demographic characteristics such as age, race, sex, income, marital status and region of the country. Data are from the Survey of Income and Program Participation. As in all surveys, the data are subject to sampling variability and other sources of error. Selected tables provide historical data from 1988-1993. Tables are available on the Internet at http://www.census.gov/hhes/www/hsgaffrd.html. Copies of the report are available from the Public Information Office's 24-hour Fax-on-Demand service on 1-888-206-6463, request Document Number 1242; or call 301-457-3030.-X-The Census Bureau--pre-eminent collector and provider of timely, relevant, and quality data about the people and economy of the United States. In over 100 surveys annually and 20 censuses a decade, evolving from the first census in 1790, the Census Bureau provides official information about America's people, businesses, industries and institutions.
