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U.S. Department of Commerce Economics and Statistics Administration U.S. CENSUS BUREAU Issued May 2009 H121-09-1
Howard A. Savage
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In 2004, about 58 percent (+/– 0.6) of • American families (current owners as well as renters) could afford to purchase a modestly priced home in the state where they lived. That is, they could afford to purchase a modestly priced home with cash or could qualify for a 30-year conventional mortgage with a 5 percent down payment. A modestly priced home is one that is among the 25 percent least expensive owner-occupied homes in the area where a family lives (Table 1). 

The percentage of families able to buy a • modestly priced home was higher in 2004 than in 2002, when about 56 percent (+/– 0.7) could afford to purchase a modestly priced home (Table 1).

About 8 percent (+/– 0.4) of families who • were renting could afford to buy a modestly priced home in 2004—the same as the 8 percent (+/– 0.5) of renters who could afford such a purchase in 2002 (Table 1).

About 12 percent (+/– 1.6) of non-Hispanic • White families who were renting in 2004 could afford a modestly priced home, compared with 4 percent (+/– 1.9) of Black families who were renting (Figure 2).

Renter families in 2004 were usually • disqualified from purchasing a modestly priced home for more than one reason (lack of down payment, excessive debt, or insufficient income). About 72 percent (+/– 1.1) of renter families did not qualify because of multiple reasons (Table 4).

Down payment assistance would do more • to improve the affordability of a modestly priced home for renters than lower down payment requirements (which would increase monthly mortgage payments) or a major reduction in interest rates. Financial assistance would, however, require funding from another source, ideally from a party that has no financial gain from the transaction, such as employers, nonprofit groups, or a governmental agency (Table 5).

Modestly Priced Homes

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