Third of U.S. Markets Less Affordable Than Historic Norms

August 7, 2014

A third of the nation's counties are less affordable now than they were over the last 14 years, according to a new report by RealtyTrac analyzing affordability in more than 1,000 counties. Thirty-four percent of the country's housing markets tracked by the survey have surpassed their historical averages for income-to-price affordability percentages since 2000.

What's more, rising interest rates — which have been expected for some time — could push that number to 53 percent of housing markets.

"The good news is that none of the nearly 1,200 counties we analyzed for the second quarter has regressed to the dangerously low affordability levels reached during the housing-price bubble. And even if interest rates increased 1 percentage point, only 59 counties representing 2 percent of the U.S. population would be at or above bubble levels in terms of affordability," says Daren Blomquist, vice president at RealtyTrac. "But the scales are beginning to tip away from the extremely favorable affordability climate we've seen over the last two years, with one-third of the counties analyzed — representing 19 percent of the total population in those counties — now less affordable than their long-term averages."

Still, 81 percent of the U.S. population lives in markets where the percentage of income needed to purchase a median-priced home is at or below its long-term average, Blomquist says.

"Buyers looking for markets with a combination of affordable housing and a good job climate will find those mostly in the middle of the country, in places such as Columbus, Ohio; Oklahoma City; Omaha, Neb.; Des Moines, Iowa; and Minneapolis, all of which have counties where 20 percent or less of the median income is needed to buy a median-priced home and where unemployment rates are 5 percent or lower," Blomquist says.

The report calculates both the percentage of median income needed to make monthly payments on a median-priced home as well as the historical trend in each county's income-to-price affordability percentage, dating back to January 2000.

The report highlights some of the following counties as being more affordable than their long-term averages in the second quarter:

  • Los Angeles County 
  • Cook County, Ill. (Chicago)
  • Maricopa County, Ariz. (Phoenix metro)
  • San Diego and Orange counties in Southern California
  • Miami-Dade County
  • New York City boroughs of Kings County (Brooklyn) and Queens County

On the other hand, these counties were found to be less affordable than their long-term averages:

  • San Francisco County
  • Multnomah County, Ore. (Portland)
  • Travis County, Texas (Austin)
  • Bexar County, Texas (San Antonio)
  • Harris County, Texas (Houston)
  • Fulton County, Ga. (Atlanta)

The report also looked at markets with a favorable combination of low income-to-price affordability percentages as well as low unemployment rates. The following counties topped that list:

  • Franklin County, Ohio (Columbus)
  • Oklahoma County, Okla. (Oklahoma City)
  • Tulsa County, Okla. (Tulsa)
  • Summit County, Ohio (Akron)
  • Douglas County, Neb. (Omaha)
  • Greenville County, S.C. (Greenville)
  • Polk County, Iowa (Des Moines)

Source: RealtyTrac