Higher Home Values Chip Away at Affordability

Another housing index confirms that housing affordability suffered in the second quarter, as home prices in many markets were on the rise.

Check out NAR’s latest Housing Affordability Index

Sixty-three percent of new and existing homes sold between the beginning of April and end of June were affordable to families earning the median income of $65,800 – down from nearly 67 percent in the first quarter, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index.

The national median home price rose from $210,000 in the first quarter to $230,000 in the second quarter, according to the index.

“Home price appreciation in many markets across the nation are a sign that the housing recovery continues to move forward,” said NAHB chairman. “At the same time, the cost of building a home is rising due to higher costs for buildable lots and skilled labor.”

The National Association of REALTORS® reported earlier this week that rising home prices are proving particularly problematic for renters.

“With home prices and rents continuing to rise and wages showing only modest growth, declining affordability remains a hurdle for renters considering homeownership — especially in higher-priced markets,” says Lawrence Yun, NAR’s chief economist.

According to NAHB’s index, the nation’s most affordable major housing market in the second quarter was Youngstown-Warren-Boardman, Ohio-Pa., where nearly 91 percent of all new and existing homes sold in the quarter were affordable to families earning the area’s median income of $53,700. Other affordable major cities that topped the list included Syracuse, N.Y., Indianapolis-Carmel, Ind.; Scranton-Wilkes-Barre, Pa.; and Cincinnati-Middletown, Ohio-Ky.-Ind.

Kokomo, Ind., topped the list of the most affordable small housing markets, where nearly 96 percent of homes sold during the second quarter were affordable to families earning the area’s median income of $55,200. Other smaller markets topping the list included Davenport-Moline-Rock Island, Iowa-Ill.; Lima, Ohio; Elmira, N.Y.; and Cumberland, Md.-W.Va.

Meanwhile, the market that was the least affordable in the second quarter was San Francisco-San Mateo-Redwood City, Calif., where just 11 percent of homes sold were affordable to families earning the area’s median income of $103,400. Other major metros that were found to be the least affordable included Los Angeles-Long Beach-Glendale, Calif.; Santa Ana-Anaheim-Irvine, Calif.; San Jose-Sunnyvale-Santa Clara, Calif.; and New York-White Plains-Wayne, N.Y.-N.J.

Among smaller markets, the five least affordable cities were Santa Cruz-Watsonville, Calif., where 18.2 percent of all new and existing homes sold were affordable to families earning the area’s median income of $87,000, followed by Napa, Salinas, San Luis Obispo-Paso Robles and Santa Barbara-Santa Maria-Goleta.

Source: National Association of Home Builders

 

http://feedproxy.google.com/~r/DailyRealEstateNews/~3/ahfIeHDGT5c/higher-home-values-chip-away-affordability