Where the Affordable Housing Is (And Is Not) – NMP Skip to main content

Where the Affordable Housing Is (And Is Not)

Jul 21, 2016
The continuing struggle for buyers seeking affordable homeownership opportunities is the focus of two new reports

The continuing struggle for buyers seeking affordable homeownership opportunities is the focus of two new reports.

The continuing struggle for buyers seeking affordable homeownership opportunities is the focus of two new reports: One that explains why some markets and not others offer affordable options, and one that urges buyers to consider homeownership in purportedly “bad” neighborhoods.

Over at Trulia, chief economist Ralph McLaughlin is providing an explanation on why certain cities are conspicuously absent when it comes to affordable homeownership options. His answer: Blame the municipal officials!

“We found that the rate at which the nation’s housing stock has grown relative to demand is low and that while elasticity has fluctuated during the last 30 years, builders are providing less housing now as prices rise than they have in the past,” McLaughlin wrote. “Of late, land use regulation, and in particular, zoning, has been blamed for keeping supply low in many markets. That story, however, is a simplistic one that overlooks the nuances involved with how local governments actually employ zoning across the country. Our research finds that local bureaucracy, measured by building approval delays, affect housing supply elasticity rather than restrictive zoning.”

However, McLaughlin admitted that Mother Nature deserves to share some blame with City Hall in certain parts of the country.

“Both natural restrictions as well as government regulation can affect how elastic a given market is,” he continued. “For example, it is naturally much more difficult to build new homes in places with steep topography surrounded by water—such as San Francisco—than it is in areas with a flat buildable landscape, like Phoenix. It is also easier to get approval for new development in areas with less regulation, such as New Orleans and Mobile, Ala., than it is in areas with more regulation, like Honolulu and Los Angeles.”

McLaughlin identified Las Vegas as having “the most elastic housing market in the U.S. over the past 20 years,” with prices increasing by 71.4 percent while the housing stock increased 87.8 percent. He also pegged New Orleans as the least elastic housing market, with house prices rising by 77.8 percent over the past 20 years while the housing stock only experienced a 1.7 percent uptick, and he also bemoaned the affordability problems in California.

“In some of these markets—such as Los Angeles, San Francisco, and San Jose—home prices have tripled over the past twenty years, and affordability has fallen dramatically,” he said. “For example, in San Jose … middle class households have to spend about 13 percent more of their income to the median priced home compared to just four years ago, so supply is not keeping up enough to moderate affordability.”

Over at RealtyTrac, there is an unusual solution for potential homeowners trying to find affordable property: Move into a “bad” neighborhood. While the company is somewhat vague in identifying the primary factors that define a “bad” neighborhood—there is a brief mention of failing schools and a surplus of underwater houses, but nothing on crime or unemployment—it nonetheless insists that they have potential for becoming desirable communities. RealtyTrac named its “Top 5 Rough Hoods on the Rebound” as East St. Louis, Mo.; Baltimore; Charlotte, N.C.; Jacksonville, Fla.; and Plainfield, N.J.

“It is clearly evident from this data that many individuals and institutions are betting on these hyperlocal housing markets to still bounce back,” said Daren Blomquist, senior vice president at RealtyTrac. “Home flipping returns are substantially above the national average, indicating strong buyer demand for fixed-up homes; construction loans are increasing, indicating increased development often at a large scale; and the share of millennial population is increasing, indicating that the pool of new renters and homebuyers is growing.”

About the author
Published
Jul 21, 2016
Jobs Report Comes In Weak After Mortgage Rates Surge

Employers added just 29,000 jobs in September, sending Treasury yields lower and offering a potential counterweight to the recent rise in mortgage rates

Oct 02, 2026
Price Cuts Hit Four-Year High As Mortgage Rates Top 7%

More than one in five listings took a price cut in September, but pending sales still posted their sharpest annual decline since March 2025

Oct 01, 2026
Serious Mortgage Delinquencies Rise 19% After Five Months Of Improvement

ICE data shows 574,000 mortgages were at least 90 days past due in August, while early-stage delinquencies remained below year-ago levels

Sep 29, 2026
Smaller Down Payments Give Buyers More Room, But Rates Limit The Savings

The typical down payment fell 9% from a year ago, while shifting market conditions are giving originators different affordability conversations across the country

Sep 25, 2026
Mortgage Rates Break 7% Just As Builders Find A Way To Move Buyers

New-home sales rose 6.4% in August as builders cut prices, offered incentives, and sold more lower-priced homes. Now mortgage rates are moving against buyers again

Sep 25, 2026
Borrowers Want Digital Closings, But Some Originators Remain Hesitant

ServiceLink finds 45% of surveyed LOs cite borrower reluctance as a barrier, even though most recent buyers say digital options would influence their choice of mortgage provider

Sep 23, 2026