The Affordability Challenge
An $185,000 home requires a 5% cash down payment.
$185,000 – down payment = remainder of mortgage
Estimated monthly payment (PITI*):
$1,385 (30-year fixed loan at 4.125% w/ 5% down payment)
*PITI – Monthly payment including principal, interest, homeowner’s insurance and property taxes.
[Source: Nerdwallet mortgage calculator and Navy Federal Mortgage Loan Calculator]
Benchmarks for affordability/attainability
The US National Housing Act of 1937 indicates that housing expenses exceeding 30% of household income is defined cost burdened housing.
Gross income required to be able to afford housing (P&I):
- Housing Costs
- Other Expenses, Savings
Gross income required to be able to afford total housing (PITI):
- Housing Costs
- Other Expenses, Savings
Conclusion
Annual income required to be able to afford a $185,000 home without being cost burdened (housing costs at 25% of gross income): $40,896 – $66,480.
Median household income in Wayne County: $42,434
Per Capita Income in Wayne County: $23,376
The current median household income could afford $884 (25%) to $1,060 (30%) in monthly housing costs before they are considered cost burdened.
If the average household barely meets the housing cost requirements (with a 5% down payment of almost $10,000 cash), then more than half of all workforce will not be able to afford a home without being cost burdened.
