USA - The metropolitan areas encompassing Indianapolis-Carmel, Ind. and Youngstown-Warren-Boardman, Ohio-Pa. tied for the title of most affordable major U.S. housing market in this year's first quarter, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI), released today. Meanwhile, lower home prices and mortgage interest rates helped boost housing affordability across the nation in the first three months of this year.
“The latest HOI shows that about 44 percent of new and existing homes that were sold in the United States during this year’s first quarter were affordable to families earning the national median income,” said NAHB President Brian Catalde, a home builder from El Segundo, Calif. “This is up from 41.6 percent of homes sold in the final quarter of 2006, and is likely the result of lower house prices as well as the very favorable financing conditions that existed at the beginning of this year.”
“The national weighted interest rate on prime quality fixed- and adjustable-rate home mortgages, which is used in calculating the HOI, slipped to 6.4 percent in the first quarter of this year, down from 6.52 percent in the final quarter of 2006 and the lowest level since the first quarter of 2006, when it was gauged at 6.39 percent,” said NAHB Chief Economist David Seiders. “Meanwhile, following a strong nationwide surge that started in early 2004 and continued through mid-2006, overall home prices weakened for three consecutive quarters leading up to and including the period encompassing January through March of 2007. Together, these factors improved the typical family’s ability to purchase a home,” he said, “although tightening of lending standards in the subprime component of the mortgage market certainly affected more marginal credit risks as the first quarter drew to a close.”
In the nation’s most affordable major housing markets of Indianapolis and Youngstown, 89 percent of new and existing homes that were sold during the first quarter of this year were affordable to families earning those areas’ respective median household incomes of $63,800 and $51,400. The median sales price of all Indianapolis homes sold in that time frame was $116,000 and the median sales price of all Youngstown-area homes sold was just $78,000. Also near the top of the list for affordable major metros in the first quarter was Dayton, Ohio, followed by Detroit-Livonia-Dearborn, Mich., and Grand Rapids-Wyoming, Mich., respectively.
Midwestern metros also dominated the list of the most affordable smaller housing markets (defined as those with fewer than 500,000 people). Kokomo, Ind., was at the top of that list, followed by Lansing-East Lansing, Mich.; Lima, Ohio; Saginaw-Saginaw Township North, Mich.; and Bay City, Mich., in that order.
Once again at the bottom of the affordability scale was Los Angeles-Long Beach-Glendale, Calif., where just 3 percent of homes sold in the first quarter were affordable to families earning the metro’s median household income of $61,700. The median price of all homes sold in that area was $525,000. As usual, Los Angeles shared the bottom of the affordability scale with other major California metros including Santa Ana-Anaheim-Irvine as the second-least affordable, San Francisco-San Mateo-Redwood City as the fourth least affordable and Modesto as the fifth least affordable large housing markets in the nation. As the third least affordable major metro, New-York-White Plains-Wayne, N.Y.-N.J. was the only non-California location within the bottom five.
Continuing the trend, all five of the least affordable small cities (populations under 500,000) were located in California during the first quarter, with Salinas at the very bottom of the chart followed by Merced; Santa Barbara-Santa Maria-Goleta; Napa; and San Luis Obispo-Paso Robles.
Please visit www.nahb.org/hoi for tables, historic data and details.
IMPORTANT EDITOR’S NOTE ABOUT LOCAL INCOME CALCULATIONS IN THE HOI: In 2007, the Department of Housing and Urban Development began using data from the American Community Survey collected in 2005 as the basis for estimating median family incomes. Previously, HUD had used the 2000 Census as the basis for these income estimates. Because of differences in the underlying surveys, comparisons between HUD’s median family incomes for 2007 and prior years are not valid. Nationally, the estimated median family income for 2007 is 1 percent lower than it would be following previous data collection procedures. As a result, some metropolitan areas will appear to have lower median incomes for 2007 than previously; however, HUD has stated that such 2006-to-2007 comparisons are not valid indicators of local median family income changes. Please refer questions on this topic to Gopal Ahluwalia (202-266-8480) or Rose Quint (202-266-8527).
SECOND EDITOR’S NOTE: The NAHB/Wells Fargo HOI is a measure of the percentage of homes sold in a given area that are affordable to families earning that area’s median income during a specific quarter. The HOI is strictly the product of NAHB Economics, and is not seen or influenced by any outside party prior to being released to the public. Visit www.nahb.org/hoi for tables, historic data and details. For more NAHB economic data, go to http://www.housingeconomics.com/