Housing Affordability Reaches Record Level as Tight Credit Conditions Impede Housing Market

February 23rd, 2012 by DWM Magazine

Nationwide housing affordability, as measured by the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI), rose to a record level during the fourth quarter of 2011, while prospective home buyers continued to feel the constraints of tighter credit standards and a soft economy, according to a report from the NAHB.

HOI data indicated that 75.9 percent of all new and existing homes sold in the fourth quarter were affordable to families earning the national median income of $64,200, the highest percentage recorded in the 20-year history of the index.

“While today’s report indicates that homeownership is within reach of more households than it has been for more than two decades, overly restrictive lending conditions confronting home buyers and builders remain significant obstacles to many potential homes sales, even with interest rates at historically low levels,” says Barry Rutenberg, chairman of the NAHB and a home builder from Gainesville, Fla.

In the Youngstown-Warren-Boardman, Ohio, area, the most affordable major housing market in the country during the fourth quarter, 95.1 percent of all homes sold during the quarter were affordable to households earning the area’s median family income of $54,900, according to the report.

Also ranking at the top of the most affordable major housing markets, in descending order were Lakeland-Winter Haven, Fla.; Modesto, Calif.; Harrisburg-Carlisle, Pa.; and Toledo, Ohio.

Among smaller housing markets, the most affordable was Kokomo, Ind., where 99.2 percent of homes sold during the fourth quarter of 2011 were affordable to families earning the median income of $59,100. Other smaller housing markets at the top of the index included Fairbanks, Alaska; Cumberland, Md.-W.Va.; Lima, Ohio; and Rockford, Ill.

In New York-White Plain-Wayne, N.Y.-N.J., the least affordable major housing market during 2011′s fourth quarter, 29.0 percent of all homes sold were affordable to those earning the area’s media income of $67,400. This was the 15th consecutive quarter in which the New York metropolitan division held this position, according to the report.

Other major metro area at the bottom of the affordability index included Honolulu; San Francisco-San Mateo-Redwood City, Calif.; Santa Ana-Anaheim-Irvine, Calif.; and Los Angeles-Long Beach-Glendale, Calif., respectively.

Ocean City, N.J., where 47.5 percent of the homes were affordable to families earning the median income of $70,100, was the least affordable of the smaller metro housing markets in the country during the fourth quarter. Other small metro areas ranking near the bottom included Laredo, Texas; San Luis Obispo-Paso Robles, Calif.; Santa Cruz-Watsonville, Calif.; and Brownsville-Harlingen, Texas.

Tables, historic data and additional details are available through the NAHB website.

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