Home Affordability Results For All 225 Metro Areas : Q3 2010

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Last quarter, with home prices still relatively low and mortgage rates making new, all-time lows almost weekly, home ownership costs were extraordinarily low in Ohio, and in most U.S. markets.

Low Rates + Flat Prices = Highest Affordability Levels Ever

According to the National Association of Home Builders' quarterly Home Opportunity Index, 72.5 percent of all homes sold between June-September 2010 were affordable to families earning the national median income.

That's an all-time high for home affordability, tying the record set in the first quarter of 2009, a period when the recession was at its worst.

Now, prior to the recession, the Home Opportunity Index rarely topped 65.  Since the start of the recession, though, it's yet to fall south of 70 -- even as the economy is expanding. Jobs growth is happening, manufacturing output is increasing, and Wall Street is going bullish.

You would expect homeowner costs to rise with the economy but, so far, however, mortgage rates and home prices have failed to keep pace.  It's great news for home buyers.

Cincinnati, Columbus And Dayton Are Affordable

National affordability is up, but all real estate is local. On a city-by-city basis, last quarter's home affordability varied.

At the top of the list is Kokomo, IN in which 96 percent of homes were affordable to families earning the area's median income. But Kokomo is a smaller city.  If we look at major cities, Indianapolis led the pack with 93% affordability.

Not surprisingly, the Midwest was well-represented among the NAHB's most affordable cities. Cincinnati, Columbus, and Dayton handily beating the national average. Same for most of Ohio and downstate Illinois.

• Dayton, Ohio : 90.4 percent
• Springfield, Illinois : 87.9 percent
• Cleveland, Ohio : 85.7 percent
• Cincinnati, Ohio : 84.6 percent
• Columbus, Ohio : 84.1 percent

On the opposite end of the affordability scale, however, is the New York-White Plains, NY-Wayne, NJ region. For the 10th consecutive quarter, the New York Metro region ranked last in U.S. home affordability.

Just 23% of homes are affordable to families earning the local median income.

The rankings for all 225 metro areas are available online.

With Mortgage Rates Rising, Affordability Gets Worse

Regardless of where you live and how it ranks relative to the next town over, home affordability is under attack. Mortgage rates are at a 5-month high and loan costs are rising.  Plus, the number of homes going under contract are rising which suggests a strong winter housing market.

It may not always feel like it, but the economy is improving. Home affordability is going to take a hit. f you planned to buy a home mid-2011, you may want to consider moving up your time frame.

And when the time comes, you'll need a mortgage.by email. Send me bullet points on your plan and I'll put something together for you.

(Post adapted from Bring the Blog, a blog-writing service for loan officers and REALTORS®)