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The Least Affordable Housing Market Is …

Phil Hall
Jun 23, 2016
The East Coast-West Coast rivalry took on a pricey twist as New York and California vied for the title of least affordable housing market, according to RealtyTrac’s Second Quarter 2016 Home Affordability Index

The East Coast-West Coast rivalry took on a pricey twist as New York and California vied for the title of least affordable housing market, according to RealtyTrac’s Second Quarter 2016 Home Affordability Index.

In fairness, unaffordable housing is not a coast phenomenon: RealtyTrac determined that 18 percent of U.S. county housing markets in the second quarter were less affordable than their historically normal levels, a five percent increase from the first quarter but a 20 percent drop from one year earlier. RealtyTrac analyzed data impacting 417 counties and came up with an affordability index based on the percentage of average wages needed to make monthly house payments on a median-priced home with a 30-year fixed rate and a three percent down payment plus property taxes and insurance.

Buying a median priced home in the second quarter required 35.4 percent of average weekly wages on average across all 417 counties analyzed for the report. But when it came to being truly unaffordable, the top market was a Big Apple hot spot: Kings County (better known as Brooklyn), which required 121.7 percent of average weekly wages to buy a median-priced home. But not to be outdone, the West Coast took up the remaining top five slots: California’s Marin County (118.1 percent), Santa Cruz County (113.5 percent) and San Francisco County (94.6 percent), plus the ultra-West Coast destination of Hawaii’s Maui County (92.8 percent).

“Although nearly one in five U.S. housing markets was not affordable by historic standards in the second quarter, the good news is that affordability is improving compared to a year ago in the majority of markets thanks to a combination of slowing home price appreciation and accelerating wage growth, along with falling interest rates,” said Daren Blomquist, senior vice president at RealtyTrac. “The average interest rate on a 30-year fixed rate mortgage is down 37 basis points from a year ago, while annual wage growth accelerated compared to a year ago in 72 percent of the markets we analyzed and annual home price growth slowed compared to a year ago in 68 percent of the markets, including bellwether markets such as Los Angeles County, Miami-Dade County, Brooklyn, Dallas County, and San Francisco County. For example in San Francisco County, annual home price appreciation slowed to 2 percent in the second quarter of 2016 compared to 21 percent in the second quarter of 2015 even while annual wage growth accelerated from five percent to six percent. Affordability constraints are beginning to rein in home price appreciation even while wage growth is gaining speed in an increasing number of markets.”

Published
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