Survey Says: Fewer Affordable Homes

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By Les Christie

NEW YORK -- It just got a little harder for most Americans to buy a home, according to an industry survey.

Nearly 74 percent of the new and existing homes sold in the three months ended June 30 were affordable to families who earn the national median income of $65,000, according to the National Association of Home Builders and Wells Fargo. That's down from 77.5 percent a quarter earlier, but still a very high level of affordability, historically speaking.

Rising prices were responsible for the decline in affordability. Median home prices were up in 92 percent of the markets surveyed, while median income didn't budge.

Barry Rutenberg, the NAHB's chairman and a home builder from Gainesville, Fla., said the decline in affordability was a positive sign for the market.

"[It's] another signal that the housing recovery is starting to take root, and it lends needed confidence to prospective buyers and sellers who have been reluctant to move forward in the current marketplace," he said.

The decline came despite record-low mortgage rates.

The 30-year fixed rate averaged almost 4 percent at the end of March and dropped to 3.66 percent by the end of June, according to Freddie Mac. But that wasn't enough to offset price increases and stagnant wages.

Among major housing markets, Youngstown, Ohio, had the most affordable prices. In the old steel manufacturing town, 93.4 percent of homes sold could be comfortably purchased by residents with the typical family income of $55,700.

Dayton, Ohio, Buffalo, N.Y., Indianapolis, Ind., and Modesto, Calif., ranked as the other most affordable large markets.


The leader among smaller housing markets was Fairbanks, Alaska, where 98.7% of homes sold were affordable for the average household. Other bargain markets include Mansfield and Springfield, Ohio, Carson City, Nev., and Kokomo, Ind.

The New York metro area was the least affordable market, with only 29.4 percent of homes within reach of the average family. The least affordable small markets were Ocean City, N.J., San Luis Obispo, Calif., Santa Cruz, Calif., Dover, Del., and Santa Barbara, Calif.

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Survey Says: Fewer Affordable Homes

Home price as percentage of income: 152%
Median home price: $99,000
Median family income: $65,300

Lansing is the first of five (six, if parts of the South Bend region are included) metropolitan areas located in Michigan to make this list. Home prices in the area are expected to rise by an average of 5.8 percent annually between 2012 and 2017, among the top third projected increases in the country. The median home price is just south of $99,000, or $60,000 less than the median home price in the United States.

Read more at 24/7 Wall St.

Photo: Flickr/mwlguide

Home price as percentage of family income: 152%
Median home price: $108,000
Median family income: $70,900

The median home price in Appleton of $108,000 is higher than any metro area on this list, but it is still well below the U.S. median home price of $159,000. Home prices have consistently been cheap in the area for years. The median price between 2007 and 2012 only declined by 4.9 percent, far less than the national drop of 33.3 percent.

Read more at 24/7 Wall St.

Photo: Flickr/.Larry Page

Home price as percentage of family income: 150%
Median home price: $79,000
Median family income: $52,300

The median family income in Battle Creek of $52,300 is the 23rd lowest among all metro areas surveyed. But with home prices the third cheapest of all metro areas, buying a home is quite affordable. Home prices were relatively cheap before the economic downturn, too. Prices fell by 16.1 percent from their peak in the second quarter of 2006 to the first quarter of 2012, a far more modest decline than the nationwide home price drop of about 33 percent.

Read more at 24/7 Wall St.

Photo: Flickr/battlecreekcvb

Home price as % of family income: 150%
Median home price: $80,000
Median family income: $53,300

Homes in the Youngstown-Warren-Boardman area are affordable, even for those with modest incomes. While median family income in the region is $9,600 lower than the national median income, median home prices are even lower — the fifth lowest in the country.

Read more at 24/7 Wall St.

Photo: Flickr/Vibrant Northeast Ohio

Home price as % of family income: 141%
Median home price: $89,000
Median family income: $62,900

The median family income in Monroe is the same as the median family income in the United States. But the median home price of $89,000 is $60,000 lower than the U.S. median home price.

Read more at 24/7 Wall St.

Photo: Flickr/rkramer62

Home price as percentage of family income: 139%
Median home price: $79,000
Median family income: $56,900

Memphis is the only metropolitan area on this list not located in the Midwest. While home prices of $79,000 are the third lowest of all metropolitan areas measured, home prices are expected to rise at an annual rate of 6 percent between 2012 and 2017, more than 2 percentage points more than the national median. Home prices are expected to rise 8.6 percent next year alone, one of the biggest growth rates in the country.

Read more at 24/7 Wall St.

Photo: Flickr/NathanReed

Home price as percentage of family income: 133%
Median home price: $95,000
Median family income: $71,600

In the Warren-Troy-Farmington Hills metro area, the combined factors of high income and low home prices can make paying for a house easy. The median family income of $71,600 is the highest on this list and nearly $20,000 higher than the nearby Detroit metro. Furthermore, the median home price of $95,000, which has fallen 40.9 percent since it reached its peak in the second quarter of 2005, means that homes have become a bargain for those who can afford to buy one in this shaky economy.

Read more at 24/7 Wall St.

Photo: Flickr/ellenm1

Home price as percentage of family income: 132%
Median home price: $80,000
Median family income: $60,000

Median home prices in Rockford are only expected to rise by 2.4 percent in 2013, less than the 5 percent price increase expected nationally. However, between 2012 and 2017, home prices are expected to grow at an annualized rate of 4.2 percent, besting the U.S. rate of 3.9 percent.

Read more at 24/7 Wall St.

Photo: Flickr/vxla

Home price as percentage of family income: 121%
Median home price: $69,000
Median family income: $57,300

The median monthly mortgage payment for a house in South Bend is only 5.52 percent of the median monthly income. This is the only metro area in the United States, besides Detroit, where mortgage payments are less than 6 percent of median income.

Read more at 24/7 Wall St.

Photo: Flickr/davidwilson1949

Home price as percentage of family income: 79%
Median home price: $41,000
Median family income: $51,900

While home prices were already cheap in Detroit before the housing downturn, they became even cheaper after. Home prices between the first quarter of 2007 and the first quarter of 2012 fell a whopping 53.7 percent, or 14.3 percent annually — the 10th-largest drop of all metro areas surveyed. With a median home price that is $28,000 lower than any other metro area reviewed, a median mortgage payment is only 3.6 percent of monthly income.

Read more at 24/7 Wall St.

Photo: Flickr/Dave Hogg

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