Posted January 18, 2013Tweet
Mortgage rates fell faster than home prices climbed last quarter, keeping more U.S. homes affordable to more U.S. homeowners than during any period in recorded U.S. history.
According to the National Association of Home Builders, 74.1 percent of all homes sold between June-September 2012 were affordable to families earning the national median income.
The data comes from the quarterly Home Opportunity Index (HOI) which topped 70 for the 15th straight quarter. Prior to the streak, the affordability index had never crossed so high; the prior high was Q1 1999's 69.4 and, as recently as 2007, the HOI was 42.0.
Rising affordability has boosted home sales, too.
With rent rising in many U.S. cities, the monthly costs of homeowners have dropped to levels where comparable homes are less expensive to own than to rent. Plus, with more than 4.5 million jobs added to the economy since 2010, many renters may feel more "safe" about joining the ranks of homeownership.
The housing market bottomed in October 2011.
Nationwide, home affordability is higher. On a city-by-city basis, however, some areas shine. Specifically, those in the Midwest.
Among the 20 most affordable U.S. housing markets, 75% are midwestern, led by Mansfield, Ohio where homes are affordable to 97.5 percent of homeowners earning the areas median income of $57,200.
The most affordable major U.S. city is Indianapolis, Indiana with 92.9% affordability.
The Midwest was well-represented among the index's most affordable cities. Cincinnati, Columbus, and Dayton beat the national average handily. Same for most of Ohio and downstate Illinois.
On the opposite end of the affordability scale, however, is the New York-White Plains, NY-Wayne, NJ region. For the countless consecutive quarter, the New York Metro region ranked last in U.S. home affordability.
Just 28.5% of homes are affordable to families earning the local median income.
With home prices rising and mortgage rates up, little-by-little, the cost of homeownership is climbing. A strong winter market will keep momentum high, too.
If your plans for 2013 including home buying, therefore, consider moving up your time frame. Mortgage rates may drop but home values likely won't. Homes will be less affordable in a few months as compared to today.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
Deborah C. Television Crewer
The Mortgage Reports is part of my morning routine. As I read, I learn more, and have come to understand the mortgage industry. I can't thank you enough!
Thaddeus C. Systems Analyst
I am an aspiring homeowner and The Mortgage Reports helps me daily. Thank you for your excellent information.
Jerolyn C. CPA
The Mortgage Reports isn't just basic mortgage rate information -- it's analysis on rate changes and trends, and updates on the laws in lending. Subscribing to the site's daily updates is worthwhile.
2014 Conforming & FHA Loan Limits
Mortgage loan limits for every U.S. county,
as published by Fannie Mae & Freddie Mac, and the FHA.