Contact: Stu Kantor, (202) 261-5283, skantor@ui.urban.org
WASHINGTON, D.C., June 26, 2007 -- A new analysis of the Washington, D.C., housing market shows the portion of homebuyers who have very low incomes fell from 17.2 to 4.3 percent between 1997 and 2005. The spring installment of the District of Columbia Housing Monitor also reveals a continuing slowdown in home sales, though prices east of the Anacostia River were up through the third quarter of 2006 compared with one year earlier.
The quarterly Housing Monitor tracks residential sale prices, changes in the housing stock, and the supply of affordable housing. The latest edition features a special section that uses mortgage-lending data to examine trends in home-purchase loans and presents a ward-by-ward analysis of changes in the characteristics of District homebuyers.
Key findings:
- The share of homebuyers who are very low income (less than 50 percent of the area's median income) has plummeted throughout the city, falling from 17.2 percent of all home-purchase mortgages in 1997 to 4.3 percent in 2005. In Ward 5, very low income buyers accounted for 33.9 percent of home-purchase loans in 1997, but only 3.9 percent in 2005.
- Home prices declined or flattened out in all wards except 7 and 8. Inflation-adjusted home prices in these two wards rose 8.6 and 13.2 percent, respectively, between the third quarters of 2005 and 2006.
- Homebuyers in Wards 5, 7, and 8 were more than 12 times as likely to take out a high-interest-rate loan as were buyers in Ward 3. Wards 7 and 8 saw the most prevalent use of such loans, 44.3 and 45.0 percent, respectively.
"Only ten years ago, homebuyers with low incomes could still find affordable homes for sale in many of the District's wards," said Peter Tatian, author of the series. "These opportunities have largely disappeared since 2000, when home-price growth began to greatly outpace increases in incomes."
Tatian is a senior research associate at the Urban Institute's Center on Metropolitan Housing and Communities and the director of NeighborhoodInfo DC.
"While the percentage increase in middle- to high-income buyers bodes well for the District fiscally, it suggests that the District faces a continuing affordability challenge for lower-income households," said Harriet Tregoning, director of the D.C. Office of Planning. "The city will almost certainly have to develop additional avenues for creating mixed-income communities where people have the opportunity to live close to their work."
The report, available online at http://www.NeighborhoodInfoDC.org/housing/, is produced by NeighborhoodInfo DC, a partnership between the Urban Institute and the Local Initiatives Support Corporation. The District of Columbia Housing Monitor is made possible by funding from the Fannie Mae Foundation, to improve the quality of life for the people of Washington, D.C., and to enhance the livability of the city's neighborhoods.
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