Least and Most Affordable U.S. Housing Markets

Published Dec 20, 2007 | RSS Feed

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Home affordability remains a problem in many areas of the country despite falling home prices. The most affordable cities are in the Rustbelt, and the least affordable cities are scattered across California.

Nationwide housing affordability rose on a year-over-year basis, according to the most recent National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI).

Forty-two percent of the homes that sold during the third quarter were considered affordable for families earning the national median income of $59,000, up from 40.4 percent one year ago.

Most Affordable U.S. Housing Markets

Rank	Metro Area	Median Price	Median Income	% of Affordable Homes
1	Kokomo, IN	$97,000	$59,700	90.5%
2	Indianapolis, IN	$117,000	$63,800	87.5%
3	Bay City, MI	$88,000	$54,400	87.4%
4	Lansing, MI	$105,000	$64,000	87.2%
5	Davenport-Moline, IA	$87,000	$57,200	86.4%
6	Springfield, OH	$88,000	$52,500	86.1%
7	Lima, OH	$87,000	$51,400	85.9%
8	Mansfield, OH	$94,000	$52,100	85.3%
9	Flint, MI	$103,000	$57,200	84.9%
10	Detroit, MI	$96,000	$53,800	83.9%

Source: NAHB/Wells Fargo Housing Opportunity Index (HPI)

The list of the most affordable housing markets has changed very little in the last few years. Kokomo and Indianapolis have switched spots occasionally, but typically stay at the top of the list.

Kokomo ranked as the nation's most affordable housing market in the third quarter. Just over 90 percent of the homes in the area are considered affordable for households making the median family income. Indianapolis ranked second.

All of the other cities that made the list were located in either Michigan or Ohio, except for the Davenport-Moline metro area, which is located in Iowa.

Least Affordable U.S. Housing Markets

Rank	Metro Area	Median Price	Median Income	% of Affordable Homes
1	Napa, CA	$585,000	$75,800	3.3%
2	L Angeles-L Beach, CA	$515,000	$61,700	3.7%
3	Salinas, CA	$520,000	$63,400	4.2%
4	Santa Ana-Anaheim, CA	$585,000	$63,400	4.8%
5	San Luis Obispo, CA	$500,000	$64,200	5.7%
6	San Francisco, CA	$770,000	$86,500	7.0%
7	NY-W Plains-Wayne, NY-NJ	$525,000	$59,500	7.1%
8	Santa Cruz-Watsonville, CA	$630,000	$81,300	7.2%
9	Merced, CA	$278,000	$46,800	7.4%
10	S Barbara-S Maria, CA	$456,000	$67,100	8.6%

Source: NAHB/Wells Fargo Housing Opportunity Index (HPI)

The list of the 10 least affordable housing markets is primarily made up of cities in California. The one exception was the metro area of New York-White Plains-Wayne, NY-NJ, which took the number seven spot.

Napa, California was ranked as the nation's least affordable housing market for the first time in nearly 20 years. Former titleholders include San Francisco, CA (1991-2001), Salinas, CA (2002-2003) and Los Angeles, CA (2004-2006).

If you look carefully at both lists, you will see that the median family income for the majority of the California cities is not much higher than the median family income for cities in Michigan, Ohio and Indiana. Yet home prices in California are so high that they are out of reach for the majority of residents.

Only 8.6 percent of the median priced homes in the Santa Barbara area are affordable for families making the median income. In Napa, the number is even lower at 3.3 percent.

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