As prices are projected to increase throughout the year, even climbing to a 5.4% increase as early as 2020, housing affordability has become a concern for homeowners and homebuyers across the country.
In order to gauge which markets offer potential buyers the most bang for their buck, Trulia conducted a study that identifies America’s most affordable neighborhoods.
To do so, the company took the current value of all homes in the 50 largest housing markets and calculated the number of homes affordable to would-be buyers in each ZIP code that earn the area’s median income.
According to their findings, the age and proximity of a home is a significant indicator of what comminutes are indeed affordable to the typical homebuyer.
“The odds of finding affordable communities are better in markets that are less expensive, to begin with,” Trulia writes. “But less obvious is the fact that across all metros examined – regardless how pricey – we found that the most affordable communities tend to be located farther away from the city center and are comprised of older homes.”
When looking at all ZIP codes across the 50 largest housing markets, Trulia determined that the share of affordable homes in those located within 30 miles of the city center is 14 percentage points less, on average than in those ZIP codes more than 30 miles from downtown.
“A location closer to the center of the city tends to fetch a premium since that often means lower commuting costs (in both time and money), and land values tend to be higher closer to a given metro’s center of gravity,” Trulia writes.
According to Trulia, each of the nation’s 50 largest housing markets have at least one ZIP code where 50% or more homes are affordable to a potential buyer earning the local median income. However, the company claims of the more than 8,000 ZIP codes examined, 261 are completely unaffordable for the typical income earner.
“It’s likely no surprise that the nation’s priciest metros tend to be home to the biggest shares of entirely unaffordable ZIPs,” Trulia writes. “Of the 50 markets analyzed, San Francisco, San Jose and Los Angeles – all among the country’s most expensive housing markets – have the highest share of ZIP codes in which no homes are reasonably affordable to workaday home buyers: 23.5%, 19% and 15.9%, respectively.”
Despite the West Coast’s predictable unaffordability, Trulia’s study indicates that most of the nation’s markets are actually affordable to the typical buyer as each housing market has a “pocket” of affordability.
“As housing affordability continues to worsen, many buyers may feel as though the very idea of an affordable neighborhood has long since gone the way of the Dodo,” Trulia writes. “But the fact is, pockets of affordable homes can be found in every one of the nation’s largest metros – and in some neighborhoods, virtually every home is reasonably affordable to typical buyers.”
According to Trulia, these are America’s most affordable housing markets:
- Pittsburgh: 22.5% of zip codes have neighborhoods where 100% of homes are affordable to the typical homebuyer
- Columbus, Ohio: 19.1% of zip codes boast neighborhoods where all of homes are affordable to the average homebuyer
- St. Louis: 18.2% of zip codes contain neighborhoods where every home is affordable to the typical homebuyer
- Kansas City, Missouri: 16.4% of zip codes include neighborhoods where each home is affordable to the average homebuyer
- Indianapolis, Indiana: 13.9% of zip codes house neighborhoods in which all homes are affordable to the typical homebuyer