Santa Barbara County Residents Paid Over 1/3 of Income to Homeownership
Recent data shows that homeowners who live in Santa Barbara County allocated 40 percent of their income towards housing costs in 2016. This ranks Santa Barbara County as the seventh highest county in California for areas with the largest proportion of income spent on housing costs.
Gavop used data collected by the United States Census Bureau to produce a study on homeowners costs as a percentage of income. The study analyzed real estate trends at the county level across the United States and found that Santa Barbara County had a median income of $67,436 and a median housing cost of $27,000 per year for those with a mortgage. The 40 percent of income spent on housing costs is the proportion of income allocated to homeowner expenses including the sum of mortgage payments, real estate taxes, insurance, and utilities.
Furthermore, the percentage of income paid towards homeownership costs is a way to measure the level of debt one has to real estate expenses. Most banks use a measurement called "debit income ratios" when approving loans. In other words, it is a ratio of monthly debt payments divided by one's gross monthly income. This analysis uses median income, home value, and median homeowner cost with a mortgage to replicate a similar debt ratio on the county level.
Areas like Santa Barbara County that have high housing costs are also the most likely to be impacted by macroeconomic strains on the economy such as recessions or unemployment. This is because residents that pay a higher percentage of income on living expenses, like mortgages, have less money left over for other expenses as well as less money to put back into the economy.
"In this study, we looked at annual housing costs as a percentage to gauge how much debt people owe to their living situation based on location," said Gavop analyst Kevin Pryor. "Here, the numbers show that Santa Barbara County residents had a median percentage of over 1/3rd of their income spent on housing costs, resulting in a large debt to homeownership in the area".
Santa Barbara County's proportion of income dedicated to homeownership costs was higher than state and national levels. This data table used figures from Gavop's analysis to show how the county outperformed state and national levels.
Santa Barbara's median housing cost in relation to income is larger than California's rate of 39 percent, and the national level of 31 percent.
In contrast, counties with low percentages of income spent on housing costs are at lower risk to economic pressures. When housing costs are low, people are better equipped to withstand factors like a rise or fall in unemployment or fluctuations in the housing market. Additionally, homeowners in these areas are less likely to go into foreclosures and less likely to experience financial issues when compared to homeowners who spend a large sum of money on their homes each year.
Gavop.com is a real estate, housing, and local data analytics service. Team members research data from public sources such as the U.S. Census Bureau and private databases to produce insightful studies. Gavop’s data is aimed to serve real estate professionals and organizations so they may gain further insight into market dynamics. Data from Gavop has been published in county and city level news organizations across the U.S. with an emphasis on localized data-driven information. Gavop.com is composed of a cross-functional team of software engineers, data scientists, and analysts.