Housing Affordability Remains at Highest Levels

November 19 2010 (Chris Moore)
Affordable-Housing-picture
Sometimes with all the doom and gloom about falling home prices and the low interest rates that don’t seem to be sparking much interest with home buyers, you forget that capitalism has a way of fixing its on problems. One such example of that fact is that those same low mortgage interest rates and declining prices has led to the most affordable housing in 20 years.

In fact, housing remained near its highest affordability level nationwide for the seventh consecutive quarter according to the latest National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI)

The HOI indicated that 72.1 percent of all new and existing homes sold in the third quarter of 2010 were affordable to families earning the national median income of $64,400. The index for the third quarter almost equaled the record-high 72.5 percent set during the first quarter of 2009 and marked the seventh consecutive quarter that the index rose above 70 percent. Until 2009, the HOI rarely topped 65 percent and never reached 70 percent.

NAHB Chairman Bob Jones stated, “With interest rates remaining at historically low levels, and house prices starting to stabilize, homeownership is within reach of more households than it has been for almost 20 years. While these favorable conditions are beginning to draw home buyers back into the market, builders continue to have major problems in obtaining credit for new-home construction, and this obstacle must be overcome if builders are to respond to improving demand moving forward.”

The most affordable major housing market in the country was Indianapolis-Carmel, Indiana, which lost that distinction last quarter to Syracuse, New York, but had previously held the top rank of most affordable market for the previous five years. In Indianapolis, 93.3 percent of all homes sold were affordable to households earning the area’s median family income of $68,700.

Rounding out the top five of the most affordable major metro housing markets were Youngstown-Warren-Boardman, Ohio-Pennsylvania; Grand Rapids-Wyoming, Michigan; and Dayton, Ohio; and Wichita, Kansas.

The distinction of the most affordable small housing market in the country went to Kokomo, Indiana, where 96.1 percent of homes sold during the third quarter of 2010 were affordable to families earning a median-income of $61,400.

Rounding out the top five of the most affordable smaller housing markets were Mansfield, Ohio; Lima, Ohio; Monroe, Michigan; and Bay City, Michigan, respectively.

As for the least affordable housing markets, New York-White Plains-Wayne, New York-New Jersey, continued to lead the nation as the least affordable major housing market during the third quarter of 2010. In New York, 22.6 percent of all homes sold during the quarter were affordable to those earning the area’s median income of $65,600. This was the 10th consecutive quarter that the New York metropolitan division has occupied this position.

Rounding out the top five of the least affordability scale included San Francisco, California; Bridgeport-Stamford-Norwalk, Connecticut; Los Angeles-Long Beach-Glendale, California; and Santa Ana-Anaheim-Irvine, California, respectively.

Santa Cruz-Watsonville, California was the least affordable of the smaller metro housing markets in the country during the third quarter. Other small metro areas ranking near the bottom of affordability included San Luis Obispo-Paso Robles, California; Santa Barbara-Santa Maria-Goleta, California; Ocean City, New Jersey; and Napa, Calif.

Tags: HOI, least affordable housing, most affordable housing, low mortgage rate, interest rates, housing market, existing home sales