Housing Affordability Reaches Record Highs
May 21, 2012
For the median-income family, buying a home has never been more affordable, new surveys by the National Association of REALTORS® and National Association of Home Builders show.
Housing affordability reached a record high for the second-straight quarter in the first three months of this year, the National Association of Home Builders/Wells Fargo Housing Opportunity index shows. Nearly 78 percent of all new and existing homes sold in the first quarter this year were affordable to families earning the national median income of $65,000, according to the index.
NAR’s quarterly Housing Affordability Index also showed a record high in affordability in the first quarter. NAR first began keeping records on affordability in 1970.
According to NAR’s index, the median-income family earning under $61,000 could afford a home costing $325,000 — more than double the national median existing single-family home price of $158,100.
“The median monthly mortgage principal and interest payment for a median-priced home would take only 13.5 percent of gross income,” according to NAR’s affordability index.
Buyers Struggle to Take Advantage
However, while affordability remains high, many home buyers are still being shut out of the market and are unable to take advantage of the deals due to tight lending conditions, housing experts say.
"For those with good credit, we've never seen better housing affordability conditions or market opportunities than we see at present," says Moe Veissi, NAR’s president. "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."
Indeed, Barry Rutenberg, NAHB’s chairman, echoes those comments, adding that “without this significant hurdle, the housing and economic recovery could be proceeding at a much stronger pace."
Where Affordability Is the Highest
Some of the most affordable housing markets in the first quarter, according to the NAHB/Wells Fargo Index are:
1. Indianapolis-Carmel, Ind. (where 95.8 percent of the homes sold during the first quarter were affordable to households earning the area’s median family income of $66,900)
2. Dayton, Ohio
3. Lakeland-Winter Haven, Fla.
4. Modesto, Calif.
5. Grand Rapids-Wyoming, Mich. (tied for fifth place)
5. Buffalo-Niagara Falls, N.Y. (tied for fifth place)
Meanwhile, the least affordable housing market continued to be New York-White Plains-Wayne, N.Y.-N.J., a title which it has held for 16-straight quarters, according to the NAHB/Wells Fargo index. Only 31.5 percent of the homes sold in the first three months were affordable to those earning the median income in the area of $68,200.
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
Updated: June 20, 2018