Posted January 18, 2013

Rankings : For Median Income-Earners, Where Home Affordability Is Highest

Most and Least Affordable U.S. Cities, Q3 2012

Most and Least Affordable U.S. Cities, Q3 2012

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.

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Low Mortgage Rates Hold Home Affordability High

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.

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Ohio, Michigan, Indiana Top Lists

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.

  • Springfield, Illinois : 91.7 percent
  • Dayton, Ohio : 88.7 percent
  • Cincinnati, Ohio : 86.9 percent
  • Cleveland, Ohio : 85.4 percent
  • Columbus, Ohio : 81.6 percent

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.

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Rising Home Prices Threaten Home Affordability

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.

Click here to get mortgage rates.

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.

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