Housing Affordability Lowest in 5 Years

According to the California Association of Realtors, there is a sharp decline in the house affordability in the state. Somewhat similar reports are confirmed by the National Association of Home Builders (NAHB) as well as Wells Fargo Bank at the National Level.

According to the Housing Opportunity Index (HOI) of Well Fargo and NAHB, 69.3 percentof house sales in the second quarter of 2013 were considered affordable for families with a median national income of $64,400. The affordability index was 73.7 percent during the first quarter of 2013 using the same national medium income. According to the records, this is the first time when the HOI index is less than 70 percent since 2008.

Housing Affordability Better in Some Parts of US

As mentioned in the reports, Ogden-Clearfield, Utah has been the most affordable county for the 4th consecutive quarter. The HOI for the county was 92.8 percent of families with an area median income of $70,800. However, there was a slight drop in the percentage as compared to the last quarter when the HOI was 93.4% for Ogden-Clearfield, Utah. Utica-Rome, New York came out to be the most affordable small market with an HOI of 97 percent of the families having the area median income of $63,800.

According to the chairman of NAHB, Rick Judson, lower house prices during the economic downfall and affordable mortgage rates have been the primary reason for the historically high affordability rate in the past few years. With a recovery in the national housing market, there has been an improvement in the prices of homes along with other factors such as building supplies, labor cost, and availability of developable spaces.Those getting priced out are searching for deals and fixer uppers through foreclosures and short sales.

David Crowe, the Chief Economist of NAHB, added that the increase in house prices signals the improvement of the housing industry with the median price of homes sold in the 2nd quarter at $202,000 as compared to $185,000 in the 2nd quarter of 2012. The improvement in house prices along with an increase in mortgage rates is the primary reason for lower affordability index. A lot will depend upon the current discussions over the secondary support offered by the Federal government in the secondary mortgage market and possible mortgage interest deduction in the near future.

Top affordability list for leading US housing markets

·Indianapolis-Carmel, Indiana

·Youngstown-Warren-Boardman

·Harrisburg-Carlisle, Pennsylvania

·Ohio-Pennsylvania

Top affordability list for small US housing markets

·Kokomo, Indiana

·Vineland-Millville-Bridgeton, New Jersey

·Cumberland, Maryland

These are some of the most affordable counties to purchase a new home. Let us have a look at the least affordable housing counties during the 2nd quarter of 2013.

Top least affordable counties in US housing market

·San Francisco-San Mateo

·Redwood City, California

·Los Angeles-Long Beach-Glendale

·New York-White Plains-Wayne

·Santa Ana-Anaheim-Irvine

·New York and New Jersey

Do you think this is a good thing, or the sharp increases are pricing out too many Buyers that could help the housing market recover even more?