Are Military Homes Affordable? (By Jennifer Riner of Zillow)

Military Housing Affordability GraphicOne might assume that given veteran and active military benefits, housing would be less expensive for military members. According to a recent study from Zillow, homes near military bases are valued 34.8 percent higher, on average, that the median U.S. home. Even when accounting for the Basic Allowance for Housing – an allowance for housing determined by location, pay grade and status, intended to give service members equitable housing across the U.S. – both renting and owning are more expensive for military members than the general public.

Renting

Many service members rent due to the flexibility leasing provides. Individuals in the military can be asked to move on very short notice, so renting is more practical given the nature of the job. But renting is fairly unaffordable near military bases.

Renting, for all residents of the United States, is currently less affordable than buying due to historically low mortgage rates and low renting inventory across major U.S. metros. Rental unaffordability is even more prevalent in the military community. Soldiers who rent pay an average of 41.6 percent of their income toward their monthly rental payments.

Of all five military branches, the Marine Corps and Navy devote the highest percentage of their incomes – 43.2 percent, to be exact – toward monthly rent. The Coast Guard, Air Force and Army all pay above 39 percent, a high price compared the U.S. average of 30 percent. So, even when attempting to save time and money by renting rather than buying and selling every few years, military members may struggle to keep up with monthly leasing dues.

Owning

You may figure, then, that purchasing a home is a more viable option for military members since it’s more affordable for the general public. But, soldiers across the U.S. pay approximately 31.5 percent of their income towards a monthly mortgage payment. Military members devote more than double the percentage of their take-home pay on mortgages than the US average, which is only 15.3 percent. And, the uncertainty of relocation becomes a bigger burden as buyers rarely reap benefits from a home purchase after only a few years. There just isn’t enough time to build equity and profit for a quick resale.

Army members pay the lowest percentage of income on mortgages compared to all branches of the military at 29 percent. Homes near Army bases are the most affordable, but are still valued roughly $50,000 more than the U.S. median home price. The Air Force pays 30.4 percent of their income on mortgages, while Coast Guard members devote 33 percent of their income on mortgages. The Navy and Marine Corps pay the highest percentage at 34.6 and 36 percent respectively, which could be due to the bases being at prime waterfront locations. In fact, homes near Navy, Coast Guard and Marine bases are valued at $90,000 or higher than the national median.

Even though military members are provided with a Basic Allowance for Housing for living off-base, these subsidies don’t provide an equal standard of living across every base. Pricing still fluctuates based on location – as remains true in all of real estate.

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