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Determining the right amount to pay for housing

The cost of housing is an ongoing hot-button topic for residents here in the Austin metro area. The general complaint is that the city’s growth is pushing rental and real estate prices through the roof.

Crunching the numbers

The key to determining a housing budget is to balance the pre-tax income of the residents with the amount paid for rent or home ownership as well as utilities and maintenance. Using a helpful app from the non-profit Texas Tribune, we can drill down into these numbers and what they mean – this can be done throughout the city by entering different ZIP codes.

Some baseline information

According to the app, Texans living in the 78701 ZIP code here in downtown Austin earn an average of $102,112, which is higher than the state’s average of $54,000 per year. Residents in the 78701 ZIP code spend an average of 26.9 percent of household income on rent, which is less than the recommended maximum of 30 percent.

The Findings

Experts believe that it is best to avoid spending more than 30 percent of income on housing regardless of how much residents’ income is or the housing costs. Mortgage lending advisors put the optimum number for mortgage payments at around 20 percent. The reason for these numbers is that a higher percentage of income going toward housing means unsustainable sacrifices in other important areas like food, transportation and childcare.

Making the numbers add up

It is important for the sustainability of a family to balance financial obligations with income. Sometimes unforeseen events are thrust upon a family, such as an expensive life-changing illness or loss of a job. This leaves many to fall into hole of debt. Bankruptcy and tax attorneys have extensive experience working with clients to file bankruptcy or make financially sound real estate choices. With their guidance, a family can better navigate difficult financial times and work towards positive solutions.

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William T. Peckham
1104 Nueces Street, Suite 104
Austin, TX 78701
Phone: 512-487-7604
Fax: 512-478-1790
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