Affordability, Low Rates Team Up
For prospective homebuyers, shopping for real estate likely is taking a little longer nowadays than it did five years ago.
As one real estate broker in Northern California observed recently, today’s buyer is more patient than buyers during the boom. Mortgage rates now are under 5%, and prices, while still drifting downward in some areas, are beginning to stabilize. “Things in this area have been affordable for almost two years,” real estate broker Lloyd Leighton, who serves Yuba and Sutter counties, in the north section of California’s Central Valley, told the Appeal-Democrat.
In the early part of the decade, the notion of affordability in California – even in Yuba, Sutter and other areas near the city of Sacramento – began to fade as the price surges common along the coast eventually worked their way inland, albeit on a smaller scale. But now affordability has become a relatively common component of the state’s housing market, according to an analysis of Department of Housing and Urban Development data by the California Building Industry Association.
The results of the study, focused on the third quarter of 2010, showed affordability increasing in all of the state’s 28 metropolitan areas. On average, a family earning the median income could have afforded 61.1% of new and existing homes sold during the quarter, compared to 58.4% the previous quarter. In the Yuba-Sutter area, where the median home price is $159,000, 83.7% of new and existing homes sold were affordable to families earning the area median income, $55,500.
To be sure, California still is home to several of the nation’s 10 least affordable communities. The National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) released last week with results for the third quarter of 2010, shows San Francisco; Los Angeles-Long Beach-Glendale; and Santa Ana-Anaheim-Irvine trolling the bottom of the affordability scale, as are smaller metro markets in the state such as San Luis Obispo-Paso Robles; Santa Barbara-Santa Maria-Goleta; and Napa.
Leading the nation’s unaffordable major markets, according to the HOI: the New York City; White Plains, New York; and Wayne, New Jersey. In New York, NAHB notes, 22.6% of all homes sold during the quarter were affordable to those earning the area’s median income of $65,600. This was the 10th consecutive quarter that the New York metropolitan market has occupied this position.
Nationwide, according to the HOI report, 72.1% of all new and existing homes sold in the third quarter of 2010 were affordable to families earning the national median income of $64,400. The index for the third quarter almost equaled the record-high 72.5% set during the first quarter of 2009 and marked the seventh consecutive quarter that the index rose above 70%.
The nation’s most affordable major market: Indianapolis-Carmel, Indiana, where 93.3% of all homes sold were affordable to households earning the area’s median family income of $68,700.