The metropolitan statistical area comprising Buffalo and Niagara Falls, N.Y., is the nation’s most affordable housing market among major metros with populations over 500,000, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index for the second quarter of 2005.
In Buffalo-Niagara Falls, nearly 90 percent of new and existing homes sold during the second quarter were affordable to families making the area’s median income of $57,000. The median price of homes that sold in Buffalo during the second quarter was just $75,000.
Also near the top of the affordability scale among major metros with populations over 500,000 were Indianapolis; Dayton, Ohio; and the area encompassing Youngstown, Warren and Boardman, Ohio-Pa., in that order.
Ohio scored the greatest number of major metros on the top-10 list, with a total of four (including Dayton, Youngstown, Toledo and Akron). The state also had three of the 10 most affordable metro areas with populations under 500,000, including Mansfield, Lima, and the area comprising Canton and Massillon.
Overall housing affordability across the United States fell for the second consecutive quarter, dipping 4.2 points to 45.9 on the HOI – meaning that approximately 46 percent of new and existing homes sold in the second quarter were affordable to median-income families. This decline was mostly attributable to a 7 percent gain in the average price of homes sold in the year’s second quarter versus the first quarter.
“One very positive factor was favorable interest rates, which continued to fuel prospects for home ownership in the second quarter,” said Dave Wilson, a custom home builder and NAHB president. “That said, housing affordability is increasingly an issue in markets nationwide, and local governments should do all they can to keep fees and regulations from adding too much to the cost of homes.”
Meanwhile, in Los Angeles-Long Beach-Glendale, Calif. – the least affordable major metro with 500,000 or more people – just 3.6 percent of all homes sold were affordable to those making the median income of $54,500 when the median sales price was $461,000.
California once again was the least affordable state overall, with eight out of 10 metros on the least affordable list among markets with over 500,000 people and nine out of 10 metros on the list for markets under 500,000.
Officials at the California Building Industry Association, a statewide trade association representing home builders, remodelers, subcontractors, architects, engineers, designers and other industry professionals, reacted today to the report’s statistics on declining home affordability in the state.
Robert Rivinius, CEO for the association, said the report is the latest proof that state and local policymakers must take action to reverse the downward affordability spiral, which he said is due primarily to the fact that new housing supply has not kept pace with the state’s inexorable population growth. California is adding between 500,000 and 600,000 people a year, equivalent to adding the population of a Boston or Milwaukee every year, the association noted.
“Every quarter, the picture gets bleaker for California families trying to achieve the American Dream of home ownership. How much worse do things have to get before state and local policymakers understand why we have such unaffordable housing costs and do something to fix the problem?” he said.
“During the 1990s, affordability was not great by national standards, but it still stood at 50 or 60 percent in many parts of the state,” he added. “Even in San Francisco, it was in the 20 percent range. But today, affordability can be measured in single digits in half our metro areas, and less than 30 percent in our most affordable region. The national average, meanwhile, is 45.9 percent. Even with housing production at its highest level in 15 years, our industry still should be building another 30,000 to 40,000 homes and apartments a year to keep pace with population growth.”
The report found that affordability plummeted by nine percentage points or more during the second quarter in three metro areas in California: Bakersfield (down 9.8 percentage points); Chico (down 9.7 percentage points); and Redding (down 9 percentage points).
In the state’s most “affordable” area, Tulare County, the affordability rating was 29.3, down from 35 three months earlier. Nationwide, the report found that only seven metro areas outside the Golden State were less-affordable than Tulare County: New York City; Nassau-Suffolk, N.Y.; Barnstable Town, Mass.; Reno, Nev.; Miami; Boston; and Newark, N.J., the state’s building association announced.
Despite the fact that California is home to the 10 least-affordable metro areas in the U.S., along with 18 of the bottom 21 and 24 of the bottom 31, Rivinius said it does not appear that help from the state Legislature is on the way. “Legislators should be taking steps to ensure that well-planned growth can occur when and where it’s needed and bring down the land costs that make it impossible to build homes that first-time buyers can afford,” Rivinius said in a statement.
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