Indianapolis Remains Most Affordable Housing Market
At the top of the housing affordability chart for the fifth consecutive time, Indianapolis, Ind. kept a strong grip on the title of most affordable major U.S. housing market in the third quarter of 2006, according to the NAHB/Wells Fargo Housing Opportunity Index (HOI).
Meanwhile, on a national basis, housing affordability remained virtually unchanged from the second quarter despite an increase in the average mortgage interest rate for the July-September period.
The index indicated that 40.4% of all new and existing homes sold during the third quarter were affordable to families earning the median U.S. income of $59,600.
“Housing affordability barely budged between the second and third quarter,” said NAHB President David Pressly, “in part because higher mortgage rates in the period were offset by somewhat lower home prices in many markets.”
The national weighted interest rate on fixed- and adjustable-rate mortgages — a key component in calculating the index — was 6.77% in the third quarter, a full 12 basis points above its level for the previous three months.
In the nation’s most affordable major housing market of Indianapolis, about 86% of homes sold in the third quarter were affordable to families earning the area’s median household income of $65,100. The median sales price of all homes sold in the metro area during that time was $122,000 — up slightly from $120,000 in the previous quarter.
Following on the list of most-affordable major markets were: Youngstown-Warren-Boardman, Ohio-Pa.; Detroit-Livonia-Dearborn, Mich.; Buffalo-Niagara Falls, N.Y.; and Grand Rapids-Wyoming, Mich.
Seven smaller metro markets with populations of less than 500,000 outranked all others in terms of housing affordability during the third quarter: Bay City, Mich.; Springfield, Ohio; Mansfield, Ohio; Lansing-East Lansing, Mich.; Lima, Ohio; Battle Creek, Mich.; and Canton-Massillon, Ohio.
Go West — to California — for the Least Affordable Markets
Also maintaining its previous standing on the index was Los Angeles-Long Beach-Glendale, Calif., as the nation’s least affordable major housing market for an eighth consecutive quarter. There, only 1.8% of new and existing homes sold during the third quarter were affordable to those earning the area’s median family income of $56,200. The median sales price of all homes sold in the area during the period was $523,000.
Other major metros at the bottom of the housing affordability chart were all in California: Santa Ana-Anaheim-Irvine, Modesto, Stockton and San Diego-Carlsbad-San Marcos.
The very least affordable smaller metro areas were also all located in California: Salinas, Merced, Madera, Napa and Santa Barbara-Santa Maria.