Unison Home Affordability Report Shows Startling Gap Between Major US Cities and Neighborhoods

First-Time Homebuyers Dramatically Increase Affordability with a 20 Percent Down Payment

SAN FRANCISCO, May 16, 2017 /PRNewswire/ — Unison Home Ownership Investors, the leading provider of home ownership investments, today announced findings from the “Unison Home Affordability Report 2017,” showcasing the percentage of homes accessible to the median household in major U.S. cities.

With a 10 percent down payment, home affordability varies significantly from city to city and neighborhood to neighborhood. Key comparisons include:

  • For cities where homes are viewed as unaffordable, median income households increase purchasing power significantly between a 10 to 20 percent down payment.
    • San Francisco is the least affordable city in the U.S., however, a 20 percent down payment increases this rate from 1.4 to 3.8 percent and opens up new neighborhoods.
    • Coastal cities present challenges but still offer options, where a 20 percent down payment would increase affordability from 16 to 30 percent in Los Angeles, 19 to 38 percent in New York, 38 to 52 percent in Seattle, 37 to 54 percent in Boston and 52 to 68 percent in Portland.
  • In already affordable cities, median income households only slightly improve purchasing power when increasing from a 10 to 20 percent down payment.
    • The Midwest offers greater affordability, with the impact of a 20 percent down payment is minimal and increases the number of homes within reach from 78 to 84 percent in Chicago, 89 to 92 percent in Minneapolis and 96 to 97 percent in Kansas City.
    • Home affordability remains high in many Southwestern and Western cities, where a 20 percent down payment increases the amount of accessible homes from 82 to 88 percent in Phoenix, 83 to 90 in Las Vegas, 70 to 80 percent in Denver and 74 to 83 percent in Salt Lake City are affordable for a household earning the median income.

“Given the high amount of student loan debt, rapidly increasing rents and rising home prices, we are seeing first-time homebuyers have a tough time saving enough money for a down payment. This data serves as a realistic financial benchmark and presents the need for additional funds to purchase a home in the desired area,” said Brian Elbogen, director of research, Unison. “At Unison, we’re committed to our partnerships with prospective homebuyers and enabling them to afford more homes in their search. By doubling their down payment, these homebuyers are able to reap the benefits of homeownership and achieve the American Dream.”

The Unison Home Affordability Report uses income data from the 2015 U.S. Census American Community Survey to estimate median household incomes by city and neighborhood. The Report uses recorded property data at the county or local level and Unison’s proprietary models to estimate property values in each city and neighborhood.

To estimate home affordability by city or neighborhood, the Report assumes a 10 percent or 20 percent down payment with associated monthly costs, at a 4 percent mortgage interest rate on a 30-year fixed-rate mortgage, with a maximum allowable DTI ratio of 45 percent. The Report uses property level data and income data to determine the percentage of homes that can be purchased with the median income in each area.

Additional Resources

About Unison Home Ownership Investors 
Unison introduced the home ownership investment category in 2007. Unison provides homeowners with long-term financing in exchange for the opportunity to share in the gain or loss in the home’s value when they decide to sell – up to 30 years later. There are no interest charges or monthly payments on the investment. Over the last decade, we’ve become the largest home ownership investor and expanded nationwide by working with lenders, regulators and institutional investors to integrate home ownership investing into the U.S. housing finance system. What sets Unison apart is true partnership: we invest at the same home value as the homeowner and share with them the downside risk and upside potential – in Unison.

Unison HomeBuyer opens the door for people to buy the home they want with less debt and risk, typically by doubling the purchaser’s down payment. This larger down payment makes it easier to qualify for a loan, increases buying power, lowers the monthly payment and/or allows a buyer to reserve cash. Unison HomeOwner provides cash now to current homeowners without the added debt or payments of a home equity loan or HELOC. Homeowners use the money to eliminate debt, remodel, pay for school, invest, or as a cash cushion for financial stability.

Media Contacts
Michael Micheletti
Director of Corporate Communications

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Michael Micheletti Director of Communications