Phoenix Homeowners Not Very Good at Living Within Means, Per Study
Phoenix homeowners are not at the top of a new study by LendingTree, which ranked the top 50 metropolitan areas of homeowners who were living within their means. Per Phoenix New Times, there were only two cities that did worse.
Combining data from the latest U.S. Census Bureau as well as anonymous credit data such as credit inquiries, use of revolving credit, non-housing debt balances as a percentage of income, and mortgage balances, each city was given a score and then averaged, with 100 points equaling those places where residents are more likely living within their means.
Phoenix ranked 48th with a mortgage debt percent to income at a staggering 102.7 percent, earning them a total score of only 25. Thirty percent used revolving credit while non-housing debt percent to income was 48.1 percent. Finally, the average number of credit inquiries within the last two years per homeowner was 5.1, which lowers the overall score further.
Per LendingTree, those results may be a result of various factors. Like many cities, Phoenix is still recovering from the housing bubble of the 2000s. Mortgage balances of over 100 percent help it to join the ranks of cities like Los Angeles and San Diego. The problem is annual salaries don’t equate with those in California’s major cities. In fact, they are even lower than the national average.
Another possible reason as explained by study author Brian Karimzad is that retirees in the Valley may be skewing household income. Still, with housing debt balances 23 percent higher than the national average, Phoenix residents are forced to be “a bit stretched.”