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Housing Affordability Surges in Fourth Quarter of 2008
Housing affordability surged nationally at the end of 2008 to its highest level in at least five years, according to the NAHB/Wells Fargo Housing Opportunity Index (HOI) released on Feb 19.
The HOI indicated that 62.4% of all new and existing homes sold in the final quarter of 2008 were affordable to families earning the national median income of $61,500, up considerably from 56.1% in the previous quarter and 46.6% in the same quarter a year earlier.
“Falling home prices and very favorable mortgage rates both contributed to the housing affordability gains we saw in the fourth quarter of 2008,” said NAHB Chairman Joe Robson.
However, Robson said, “at the same time, worsening economic conditions, historically low consumer confidence and uncertainty about future home prices kept many qualified buyers on the sidelines. Looking forward, we hope that the newly improved first-time home buyer tax credit, included in recently enacted economic stimulus legislation, will help spur buyer demand, and that government efforts to reduce foreclosures will put a floor under declining home values.”
The most affordable major housing market in the country during the fourth quarter was Indianapolis, Ind., which has now appeared at the top of the affordability list for 14 consecutive quarters. Just over 93% of all homes sold in that city during the fourth quarter of 2008 were affordable to households earning the area’s median family income of $65,100.
Also among the most affordable major metro housing markets were: Warren-Troy-Farmington Hills, Mich.; Youngstown-Warren-Boardman, Ohio-Pa.; Detroit-Livonia-Dearborn, Mich.; and Grand Rapids-Wyoming, Mich.
Several smaller housing markets were even more affordable than Indianapolis. Leading the pack, in Lansing-East Lansing, Mich., a full 95% of homes sold at the end of 2008 were affordable to middle-income earners. Other small housing markets ahead of Indianapolis on the affordability scale included Sandusky, Lima and Springfield, all in Ohio, as well as Bay City, Mich.
For the third consecutive quarter, the nation’s least affordable major housing market in the final three months of 2008 was New York-White Plains-Wayne, N.Y.-N.J., where just under 14% of all homes sold during the period were affordable to those earning the area median income of $63,000. Other major metros near the bottom of the chart included: San Francisco; Nassau-Suffolk, N.Y.; Los Angeles-Long Beach-Glendale, Calif.; and Miami.
Among smaller metro areas, San Luis Obispo-Paso Robles, Calif. was the least affordable market, along with Ocean City, N.J.; Santa Cruz-Watsonville, Calif.; Napa, Calif.; and Flagstaff, Ariz., respectively.
Visit www.nahb.org/hoi for tables, historic data and details.
 Tax Credit Web Site Looks at Opportunity of a Lifetime
Builders and other industry professionals can help spur home sales by referring prospective first-time home buyers to www.federalhousingtaxcredit.com. The NAHB Web site provides detailed information on the $8,000 federal tax credit for first-time home buyers included in the economic stimulus legislation signed into law by President Obama.
Consumers can use the Web site to find information on the tax credit – including a detailed question and answer section. It also includes information about other housing-related and small business measures in the legislation and a number of home-buying resources for consumers.
“The new tax credit provides a great opportunity for first-time home buyers,” said NAHB Chairman Joe Robson. “Combined with today’s near record low interest rates, the large selection of homes on the market and very competitive pricing, the tax credit should provide the extra incentive needed to get prospective buyers who have been sitting on the fence into the market.”
Industry professionals are encouraged to highlight the tax credit Web site when marketing to their potential first-time home buyer market.
 Plan to Attend Construction Forecast Conference
Plan to attend or watch the 2009 Spring NAHB Construction Forecast Conference & Webcast on Thursday, April 23 in Washington, D.C. to get the latest facts, insights and analysis of the housing industry.
Panels of nationally recognized experts at the day-long conference will discuss economic trends, government policies, developments in the housing industry and the results from NAHB's recent surveys.
For more information and to register, visit www.nahb.org/cfc.
 Want to Know the Housing Starts Through 2017?
Find out in HousingEconomics.com's Long-Term Forecast.
Subscribe and get downloadable Excel tables that feature the housing starts forecast, gross domestic product (GDP), demographics and more.
To learn more, visit www.housingeconomics.com.
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