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Housing Affordability Slips in First Quarter
The metropolitan statistical area comprising Youngstown, Warren and Boardman, Ohio is the nation’s most affordable housing market among major metro areas with populations exceeding 500,000, according to the NAHB/Wells Fargo Housing Opportunity Index (HOI) for the first quarter of 2005.
Also near the top of the affordability scale for areas with large populations were Grand Rapids-Wyoming, Mich.; Dayton, Ohio; and Buffalo-Niagara Falls, N.Y., in that order.
“On a nationwide basis, housing affordability posted a moderate decline in the first quarter of this year versus the final quarter of 2004, due mostly to higher home prices and a slight uptick in home mortgage rates,” said NAHB President Dave Wilson. “Our index shows that just over half of all new and existing homes sold in the first three months of this year were affordable to families earning the U.S. median family income of $58,000. This compares to the 52% of homes sold in 2004’s fourth quarter that were affordable to families earning a median income of $57,500.”
The national first-quarter decline in affordability was mostly attributable to a $6,000 rise in the median price of all new homes sold during that period to $225,000, a return to the median set in last year’s third quarter. Also, the weighted average interest rate on homes sold inched up from 5.77% to 5.79%.
“Clearly, favorable financing conditions helped limit the decline in housing affordability in the early months of this year,” said Wilson. “Even so, strong demand for homes drove prices beyond the reach of quite a few median-income earners. Local governments should be looking at ways to improve housing affordability as much as possible by reducing impact fees and other regulatory barriers to homeownership.”
In the neighborhoods comprising the Youngstown-Warren-Boardman metro area, fully 90.2% of homes sold in the first quarter were affordable to families earning that locale’s median household income of $51,300. The median price of all homes sold in the area was $86,000.
At the other end of the scale, Los Angeles-Long Beach-Glendale, Calif. was rated the least affordable major metropolitan area. There, just 5.2% of homes sold in the first three months of this year were affordable to families earning the median income of $54,500. The median price of homes that sold in and around Los Angeles during the period was $430,000.
Looking at smaller metros with populations under 500,000, Lima, Ohio rated tops for housing affordability and was the most affordable statistical area ranked overall. There, 92.3% of homes sold in the first quarter of this year were affordable to families earning the median income of $51,800, and the median price of homes sold was $75,000. Cumberland, Md.-W.V. and Canton-Massillon, Ohio were the second- and third-most affordable smaller metros, respectively.
The least affordable small metro area ranked by the HOI was Salinas, Calif., where only 4.3% of homes sold in the first quarter were affordable to median-income earners making $60,300 annually. The median sales price of homes in Salinas during the period was $545,000.
(Due to recent changes in how the federal government defines metropolitan statistical areas, some metros previously ranked by the HOI have been absorbed into other metros and no longer have their own individual rankings. To find out where each city included in the HOI now falls, click here.)
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