Housing Affordability Surges at Year-End
In the wake of falling home prices, Nationwide housing affordability surged at year-end 2008 to its highest level in at least five years, according to the National Association of Home Builders /Wells Fargo & Co. (WFC) Housing Opportunity Index, released Thursday. The HOI indicated that 62.4 percent of all new and existing homes that were sold in the final quarter of 2008 were affordable to families earning the national median income of $61,500, up considerably from the 56.1 percent of homes that were affordable to such families in the previous quarter and the 46.6 percent of homes that were affordable to them at the end of 2007. “Falling home prices and very favorable mortgage rates both contributed to the housing affordability gains we saw in the fourth quarter of 2008,” said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. “However, at the same time, worsening economic conditions, historically low consumer confidence and uncertainty about future home prices kept many qualified buyers on the sidelines." The most affordable major housing market in the country during the fourth quarter was once again Indianapolis, Ind., which has now topped the affordability list 14 consecutive times, according to NAHB. There, just over 93 percent of all homes sold in the fourth quarter of 2008 were affordable to households earning the area’s median family income of $65,100. According to the Index, the most affordable cities and their median prices are: 1. Indianapolis, Ind., $103,000 2. Warren, Mich. $125,000 3. Youngstown, Ohio, $73,000 4. Detroit, Mich., $90,000 5. Grand Rapids, Mich. $102,000 6. Syracuse, N.Y., $88,000 7. Dayton, Ohio, $90,000 8. Akron, Ohio, $90,000 9. Cleveland, Ohio, $100,000 10. Scranton, Pa., $85,000 The nation’s least affordable major housing market in the fourth quarter, according to HOI, was again New York-White Plains-Wayne, N.Y.-N.J., where just under 14 percent of all homes sold during the period were affordable to those earning the median income of $63,000. This was the metro area’s third consecutive appearance at the bottom of the list. Other major metros near the bottom of the chart included San Francisco, Calif.; Nassau-Suffolk, N.Y.; Los Angeles-Long Beach-Glendale, Calif.; and Miami, Fla. Write to Kelly Curran at firstname.lastname@example.org. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.