Who Could Afford to Buy a House in 1995?

Written by:
H121-99-1

Highlights

  • In 1995, about 56 (+/- 0.8) percent of American families (current owners as well as renters) could afford to purchase a modestly priced house in the area where they lived. That is, they could afford to purchase a modestly priced house with cash or could qualify for a 30-year conventional mortgage with a 5-percent down payment. Ninety-five percent of this group currently own their house. A modestly priced house is one that is less expensive than 75 percent of all owner- occupied houses in the area of residence. See box 1 for definitions.
  • The percentage of families able to buy a modestly priced house was lower in 1995 than in 1984 or 1988 when about 60 percent (+/- 1.0 in 1984, +/- 0.5 in 1988) could afford such a purchase or in 1991 and 1993 when about 58 percent (+/- 0.8 in 1991, +/- 0.6 in 1993) of families could afford to purchase a modestly priced house.
  • About 10 (+/- 0.6) percent of renters could afford a modestly priced house in 1995 — not much different than the 11 (+/- 0.5) percent of renters who could afford such a purchase in 1993.
  • About 19 (+/- 1.9) percent of White non- Hispanic married couples who were renting in 1995 could afford a modestly priced house, compared with 8 (+/- 3.0) percent of Black married couples who were renting.
  • Renter families in 1995 were usually disqualified from purchasing a modestly priced house for more than one reason (lack of down payment, excessive debt, or insufficient income). About 48 (+/- 1.5) percent of renter households would not qualify because of excessive debt and insufficient income for a mortgage.
  • Down payment subsidies would do more to improve affordability of a modestly priced home than lower down payments (which would also increase monthly mortgage payments) or a signficant reduction in interest rates. Subsidies would, however, require funding from a private source, such as employers or assistance from home sellers, or nonprofit groups, or a governmental agency.

Appendices

Page Last Revised - October 8, 2021