Top 20 metros with biggest jumps in affordability

NAR: Housing affordability at record high

A U.S. housing affordability index compiled by the National Association of Realtors reached a record high in the first quarter.

NAR’s affordability index gauges whether a median-income family could qualify for a conventional mortgage loan on a median-priced, existing single-family home. The index takes into account mortgage interest rates and assumes a 20 percent down payment and a monthly principal and interest payment not exceeding 25 percent of the gross median family monthly income.

An index value of 100 means that a median-income family has exactly enough income to qualify for a mortgage covering 80 percent of the cost of a median-priced home, while an index above 100 means that family has more than enough income to qualify.

In the first quarter, the quarterly composite index posted a record high level of 205.9 — the first time on record the index has risen above the 200 mark. NAR began tracking affordability in 1970.

"For those with good credit, we’ve never seen better housing affordability conditions or market opportunities than we see at present," said Moe Veissi, NAR’s president, in a statement.

Nonetheless, he said less restrictive lending standards would boost home sales.

"Although home prices are stabilizing and sales are rising, some buyers still have to jump through a lot of hoops to convince a lender that they are creditworthy, even for a mortgage that would be well within their means. This is especially true for self-employed buyers," he said.

In the first quarter, a median-income family earned $60,972, NAR reported, citing data from the U.S. Census Bureau. At that income, a family could afford a home costing $325,500, more than double the cost of a median-priced home at $158,100, NAR said.

At the prevailing mortgage rate of 4.18 percent, the monthly payment on that median-priced home would be $617; at that monthly payment, qualifying income for a median-priced home would be $29,616, assuming a 20 percent down payment, NAR said.

A separate affordability index for first-time buyers also reached a record high in the first quarter, 135.8. For that index, NAR assumes an income at 65 percent of the median family income, a home costing 85 percent of the median price and a 10 percent down payment. With those assumptions taken into account, the typical first-time buyer could afford a home costing $182,500 in the first quarter, above the national median and considerably higher than the starter home price of $134,400.

At that entry-level home price, monthly payments would be $608 and qualifying income would be $29,184.

Among the 20 metropolitan areas to see the biggest annual increases in affordability in 2011 as a whole, seven were in the South, five were in the West and four each were in the Northeast and Midwest. Allentown-Bethlehem-Easton, Pa.-N.J., experienced the biggest affordability jump, 28 percent, to an index level of 111.5.

Metropolitan Area 2010 2011 ( p) 2011 (p)
Allentown-Bethlehem-Easton, Pa.-N.J. 87.2 111.5 28.0%
Gulfport-Biloxi, Miss. 139.2 177.5 27.5%
Akron, Ohio 173.4 218.5 26.0%
Salem, Ore. 95.9 120.7 25.9%
Mobile, Ala. 131.3 164.4 25.1%
Phoenix-Mesa-Scottsdale, Ariz. 129.7 162.0 24.9%
Tucson, Ariz. 113.8 140.2 23.1%
Rockford, Ill. 155.3 189.9 22.3%
Boise City-Nampa, Idaho 124.8 152.5 22.2%
Cumberland, Md.-W.Va. 155.7 188.4 21.0%
Atlanta-Sandy Springs-Marietta, Ga. 170.7 206.0 20.7%
Salt Lake City 93.1 111.0 19.3%
Virginia Beach-Norfolk-Newport News, Va.-N.C. 97.8 116.3 18.9%
Dover, Del. 79.7 94.3 18.3%
Norwich-New London, Conn. 112.7 133.1 18.0%
Milwaukee-Waukesha-West Allis, Wis. 105.2 123.3 17.2%
Miami-Fort Lauderdale-Miami Beach, Fla. 107.0 125.3 17.1%
NY: Edison, N.J. 75.3 88.0 16.8%
Dayton, Ohio 172.3 201.3 16.8%
Jacksonville, Fla. 144.0 167.8 16.5%

Note: 2011 figures are preliminary.

Source: National Association of Realtors.

The most and least affordable metro areas were predictably less geographically diverse. Midwestern metros dominated among the most affordable areas, lead by Toledo, Ohio, at an index level of 242.9.

Metropolitan Area 2010 2011 ( p) 2011 ( p)
Toledo, Ohio 214.3 242.9 13.3%
Decatur, Ill. 225.4 236.8 5.1%
Lansing-E.Lansing, Mich. 203.7 234.9 15.3%
South Bend-Mishawaka, Ind. 209.6 218.9 4.4%
Akron, Ohio 173.4 218.5 26.0%
Atlanta-Sandy Springs-Marietta, Ga. 170.7 206.0 20.7%
Ocala, Fla. 179.2 204.3 14.0%
Cleveland-Elyria-Mentor, Ohio 177.7 204.1 14.8%
Dayton, Ohio 172.3 201.3 16.8%
Cape Coral-Fort Myers, Fla. 219.1 195.6 -10.8%
Topeka, Kan. 171.7 193.3 12.6%
Davenport-Moline-Rock Island, Iowa-Ill. 176.9 192.8 9.0%
Rockford, Ill. 155.3 189.9 22.3%
Cumberland, Md.-W.Va. 155.7 188.4 21.0%
Ft. Wayne, Ind. 175.5 187.7 7.0%
Springfield, Ill. 165.7 186.9 12.8%
Palm Bay-Melbourne-Titusville, Fla. 182.8 183.1 0.2%
Saint Louis, Mo.-Ill. 158.4 179.8 13.5%
Memphis, Tenn.-Miss.-Ark. 159.0 178.3 12.2%
Peoria, Ill. 171.7 178.1 3.7%

Source: National Association of Realtors.

Northeastern metros accounted for half of the 20 least affordable metros, while Western metros accounted for nine. The remaining metro was in the South: Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.Va. All 20 saw their affordability levels rise in 2011. Honolulu was the least affordable metro in the nation, at 39.2.

Three of the Northeastern metros are divisions of the New York-Northern New Jersey-Long Island, N.Y.-N.J.-Pa., metro area.

Metropolitan Area 2010 2011 (p) 2011 (p)
Honolulu 36.2 39.2 8.2%
Anaheim-Santa Ana-Irvine, Calif. 45.6 51.1 11.9%
San Jose-Sunnyvale-Santa Clara, Calif. 49.1 54.1 10.0%
New York-Wayne-White Plains, N.Y.-N.J. 58.8 63.9 8.5%
San Diego-Carlsbad-San Marcos, Calif. 59.5 65.0 9.3%
San Francisco-Oakland-Fremont, Calif. 58.0 66.2 14.1%
Los Angeles-Long Beach-Santa Ana, Calif. 65.1 72.7 11.7%
Boulder, Colo. 70.5 74.4 5.6%
New York-Northern New Jersey-Long Island, N.Y.-N.J.-Pa. 68.7 75.7 10.2%
NY: Newark-Union, N.J.-Pa. 73.4 79.4 8.2%
NY: Nassau-Suffolk, N.Y. 73.3 80.5 9.8%
Burlington-South Burlington, Vt. 80.4 82.1 2.1%
Boston-Cambridge-Quincy, Mass.-N.H. 77.4 84.6 9.2%
NY: Edison, N.J. 75.3 88.0 16.8%
Barnstable Town, Mass. 80.0 88.9 11.2%
Riverside-San Bernardino-Ontario, Calif. 82.2 88.9 8.1%
Farmington, N.M.  83.8 92.2 10.0%
Atlantic City, N.J. 86.6 92.2 6.4%
Washington-Arlington-Alexandria, D.C.-Va.-Md-W.Va. 88.2 93.2 5.6%
Dover, Del. 79.7 94.3 18.3%

Source: National Association of Realtors.


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