Should millennials consider buying homes above their current earning capacity?

Helping homebuyers get into high-priced mortgages they can’t afford may have been at the root of the most recent mortgage crisis, but a new Trulia report suggests that buying an expensive home may actually be a good idea in some areas of the country, particularly for millennial buyers.

Forget the widely accepted idea that monthly mortgage payments should stay below 31 percent of a household’s income. In a Nov. 11 blog post, “For Millennials, Buying an Unaffordable Home Isn’t Always a Bad Idea,” Trulia Housing Economist Ralph McLaughlin suggests that in some metropolitan areas, buyers who purchase a home they can’t afford right now in the hopes of their salary increasing later may realize affordability within a few years — or, in some cases, within just a few months.

The key? Young workers who buy in markets that are experiencing marked employment gains, McLaughlin said.

To arrive at his bold conclusions, McLaughlin projected how much income growth the average 25- to 34-year-old can expect over his career in some markets, assuming a 2-percent inflation rate.

“In many housing markets where most workers see strong wage and income growth, mortgage payments actually shrink as part of the monthly budget,” McLaughlin said.

In 73 of the 100 largest U.S. metropolitan areas, mortgage payments already fit the accepted “affordable” calculation, or even fall below that 31-percent share of a household’s monthly budget. But in 17 more metro markets, mortgage payments may be initially unaffordable, but could become feasible for homeowners within a short period of time, McLaughlin said.

In particular, mortgages in the Washington, D.C., have the potential to become affordable within about four months of purchase, McLaughlin said. Initially, buyers in this area can expect to spend 31.2 percent of their monthly budget on a 30-year mortgage, but only 13.2 percent of their budget toward the end of the mortgage. This scenario assumes a purchase price of $364,345.

Using this analysis, McLaughlin listed several other metro areas where high-priced mortgage payments may become more affordable over time. According to his findings, Silver Spring, Maryland; Madison, Wisconsin; and Tacoma, Washington, all become affordable in less than two years. Fresno, California; Denver; Riverside-San Bernardino, California; Providence, Rhode Island; and New Haven, Connecticut, all become affordable in about three years or less.

“In many housing markets where most workers see strong wage and income growth, mortgage payments actually shrink as part of the monthly budget.” – Trulia Economist Ralph McLaughlin

However, McLaughlin also listed several metro areas where taking a risk on a high-priced mortgage is definitely not a good idea.

Unsurprisingly, many West Coast markets top the list. For example, buyers in San Francisco can expect to spend 73.3 percent of their monthly budget on a 30-year mortgage initially, and that budget share may only drop to 47.9 percent over time. San Jose, Los Angeles, Oakland and Orange County are also to be avoided, McLaughlin said.

“Unaffordable payments would persist for the life of the loan,” he said.

Email Amy Swinderman.