It's more affordable than ever to buy a home, but restrictive
lending requirements are preventing many potential homeowners from
taking advantage of the bargains.
U.S. housing affordability rose to its highest level on record
in the three months of the year, according to figures released last
week by the National Association of Home Builders (NAHB) and
, besting the previous record set in the last quarter of 2011.
Over three-quarters of all new and used homes sold in the first
quarter of the year were deemed affordable for a family earning the
U.S. median income of $65,000. A home is deemed affordable under
the formula if a family pays no more than 28 percent of its monthly
income on mortgage payments, assuming a 10 percent down
Tight credit limiting sales
"Homes in this year's first quarter were more affordable than
they have been at any time in more than 20 years, yet many
potential sales are not happening because of overly tight lending
conditions that are keeping hardworking families from obtaining a
suitable mortgage," said Barry Rutenberg, NAHB chair. "Without this
significant hurdle, the housing and economic recovery could be
proceeding at a much stronger pace."
An estimated 77.5 percent of homes sold in the first quarter of
the year were deemed affordable to a family earning the median
income, up from the previous record of 75.9 percent in the last
quarter of 2011.
Indianapolis most affordable big market
The most affordable major housing market in the United States
was found to be the Indianapolis/Carmel, Ind. area, where 95.8
percent of all homes were affordable for a family earning the local
median income of $66,900.
When smaller markets are included, Cumberland, Md./W. Va. had
the nation's most affordable housing, with 99 percent of all homes
sold affordable to a family earning the area's median income of
Other communities at the top of the affordability list included
Dayton, Ohio; Lakeland-Winter Haven, Fla.; Modesto, Calif.; Grand
Rapids-Wyoming, Mich.; and Buffalo-Niagara Falls, N.Y.
New York still most costly
Not surprisingly, the nation's least affordable major housing
market was the New York City-White Plains-Wayne, N.Y & N.J.
region, where only 31.5 percent of all homes sold were deemed
affordable for a family earning the area's median income of
$68,200. The area has held the "least affordable' spot in the
survey for 16 consecutive quarters.
Other housing markets with relatively high prices compared to
incomes were San Francisco-San Mateo-Redwood City, Calif.;
Honolulu, Hawaii; Los Angeles-Long Beach-Glendale, Calif.; and
Santa Ana-Anaheim-Irvine, Calif.
The affordability index takes into account the price of homes
sold, mortgage interest rates and incomes to estimate whether a
family can afford the monthly mortgage payment on homes in their
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