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Who Could Afford to Buy a House in 1995?

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Who Could Afford to Buy a House in 1995?

August 1999

Written by:

Howard A. Savage

H121-99-1

Highlights

Who Could Afford to Buy a House in 1995?

Download Who Could Afford to Buy a House in 1995? [PDF - <1.0 MB]

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

Appendix A. Overview of the SIPP Program [<1.0 MB]

Appendix B. Definitions and Explanations [<1.0 MB]

Appendix C. Methodology [<1.0 MB]

Appendix D. Data Quality [<1.0 MB]

Appendix E. Value of Criterion Homes in 1995, by Geographic Area [<1.0 MB]

Tables

Table 1. Affordability of a Modestly Priced House for Families and Unrelated Individuals, by Tenure: Selected Years, 1984-1995 [<1.0 MB]

Table 2. Affordability of a Modestly Priced House for Families and Unrelated Individuals by Tenure and Type of Family: 1995 [<1.0 MB]

Table 3. Reasons Why Families and Unrelated Individuals Could Not Afford Modestly Priced Houses, by Tenure: 1995 [<1.0 MB]

Table 4. Effects of Possible Policy Changes on the Affordability of a Modestly Priced House for Total, Black, and Hispanic Origin Renters: 1995 [<1.0 MB]

Table A-1. Design of the 1992 SIPP Panel [<1.0 MB]

Table A-2. Design of the 1993 SIPP Panel [<1.0 MB]

Table D-1. SIPP Asset and Liability Estimates Compared to Federal Reserve Board Balance Sheet Data for the Household Sector: 1988 [<1.0 MB]

Table D-2. Comparison of Median Value in SIPP and the 1990 Census for Regions and Divisions [<1.0 MB]

Table E-1. Value of Criterion Homes in 1995, by Geographic Area [<1.0 MB]

For Families and Unrelated Individuals

Table 1-1. Maximum-Priced Home That Can Be Afforded: United States [<1.0 MB]

Table 1-2. Affordability Status by Different Types of Criterion Homes: United States [<1.0 MB]

Table 1-3. Affordability Status for a Median-Priced Home by Current Tenure [<1.0 MB]

Table 1-4. Affordability Status for a Modestly Priced Home by Current Tenure [<1.0 MB]

Median-Priced Homes

Table 2-1. Affordability Status by Current Tenure and Type of Family [<1.0 MB]

Table 2-2. Affordability Status by Race and Hispanic Origin [<1.0 MB]

Table 2-3. Affordability Status by Age of Householder [<1.0 MB]

Table 2-4. Affordability Status by 'Available' Family Money Income [<1.0 MB]

Table 2-5. Reason Cannot Be Afforded [<1.0 MB]

Table 2-6. Affordability Deficit [<1.0 MB]

Modestly Priced Homes

Table 3-1. Affordability Status by Current Tenure and Type of Family: US and Regions [<1.0 MB]

Table 3-2. Affordability Status by Race and Hispanic Origin [<1.0 MB]

Table 3-3. Affordability Status by Age of Householder [<1.0 MB]

Table 3-3A. Affordability Status by Age of Householder [<1.0 MB]

Table 3-4. Affordability Status by 'Available' Family Money Income [<1.0 MB]

Table 3-5. Reason Cannot Be Afforded [<1.0 MB]

Table 3-5A. Reason Cannot Be Afforded [<1.0 MB]

Table 3-6. Affordability Deficit [<1.0 MB]

Affordability Historical Tables

Table 4-1. Affordability Status for Median-Priced Home: US, 1984, 1988, 1991, 1993, 1995 [<1.0 MB]

Table 4-2. Affordability Status for Modestly Priced Home: US, 1984, 1988, 1991, 1993, 1995 [<1.0 MB]

Effect of Policy Changes

Table 5-1. Effect of Changes in Interest Rates for a Median-Priced Home [<1.0 MB]

Table 5-2. Effect of Changes in Interest Rates for a Modestly Priced Home [<1.0 MB]

Table 5-3. Effect of Different Down Payment Subsidies for a Median-Priced Home [<1.0 MB]

Table 5-4. Effect of Different Down Payment Subsidies for Modestly Priced Home [<1.0 MB]

Table 5-5. Effect of Changes in Required Down Payment for Median-Priced Home [<1.0 MB]

Table 5-6. Effect of Changes in Required Down Payment for a Modestly Priced Home [<1.0 MB]

Effect of Policy Changes for Black and Hispanic Origin Families and Unrelated Individuals

Table 5-7. Effect of Changes in Interest Rate for a Median-Priced Home [<1.0 MB]

Table 5-8. Effect of Changes in Interest Rate for a Modestly Priced Home [<1.0 MB]

Table 5-9. Effect of Different Down Payment Subsidies for a Median-Priced Home [<1.0 MB]

Table 5-10. Effect of Different Down Payment Subsidies for a Modestly Priced Home [<1.0 MB]

Table 5-11. Effect of Changes in Required Down Payment for a Median-Priced Home [<1.0 MB]

Table 5-12. Effect of Changes in Required Down Payment for a Modestly priced Home [<1.0 MB]

Related Information

Housing Affordability Publications

Page Last Revised - October 8, 2021

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