Amazing Differences in Affordability Depending on Geography

Home prices “firmed” in several marketsrnin the second quarter and, according to the National Association of HomernBuilders (NAHB)/Wells Fargo Housing Opportunity Index (HOI), affordabilityrndipped accordingly.  The Index, a measurernof the percentage of homes sold during the quarter that were affordable to familiesrnearning the U.S. median income, declined from 65.5 percent in the first quarterrnto 62.6 percent in the second.</p

The U.S. median income in the secondrnquarter was $63,900 and a median priced come cost $214,000 compared to $195,000rnin the previous quarter.  Interest rates,rnanother factor in affordability, compensated a bit for the rising home prices,rndecreasing by an average of 13 basis points to 4.44 percent.</p

“The second quarter HOI reflectsrnthe slow but steady march toward the historic levels of price appreciation andrninterest rates that result in affordability levels we experienced before thernmid-2000s boom,” said NAHB Chief Economist David Crowe. “While we arernseeing a slight decrease in affordability, it is still fairly high byrnhistorical standards.”</p

The major metropolitan statistical arearn(MSA) that was most affordable in the second quarter was Youngstown-Warren-Boardman,rnOhio-Pennsylvania.  A family earning thernarea’s median income of $52,700 could theoretically afford to purchase 90.4rnpercent of all new and existing homes sold in that market in the secondrnquarter.  Other affordable major marketsrnwere Indianapolis, Syracuse, Harrisburg-Carlisle, and Scranton-Wilkes-Barre.</p

The most affordable small market was Cumberland,rnMaryland where 97.2 percent of homes sold in the second quarter were affordablernto those earning the median income of $54,100. rnFollowing Cumberland in descending order of affordability were Kokomo,rnIndiana; Davenport, Iowa-Rock Island, Illinois; Battle Creek, and Lima, Ohio.</p

At the other extreme, only 11.1 percentrnof homes sold in the San Francisco-San Mateo-Redwood City MSA were affordablernto families earning the median income of $100,400.  It was the seventh straight quarter the arearnhas topped the least affordable list.  Itrnwas followed by Santa Ana-Anaheim-Irvine; Los Angeles-Long Beach; SanrnJose-Sunnyvale-Santa Clara; and New York-White Plains-Wayne, New Jersey.</p<pAll five least affordablernsmall housing markets were in California. At the very bottom was SantarnCruz-Watsonville, where 16.6 percent of all new and existing homes sold werernaffordable to families earning the area’s median income of $77,900. Other smallrnmarkets included Napa, Salinas, Santa Rosa-Petaluma, and San Luis Obispo-PasornRobles.

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