Home Affordability Hits 20 Year High

Home affordability rose to its highest level in at least 20 years in the fourth quarter of 2010, according to an index released by the National Association of Home Builders and Wells Fargo today.

The Housing Opportunity Index found that 73.9 percent of new and existing homes sold in the fourth quarter were affordable to families earning the national median income of $64,400 — surpassing the previous high, 72.5 percent, recorded in the first quarter of 2009.

“Today’s report shows that housing affordability at the end of 2010 was at its highest level since we started computing the HOI,” said Bob Nielsen, NAHB’s chairman, in a statement. “However, while this is good news for consumers, both homebuyers and builders continue to confront extremely tight credit conditions, and this remains a significant obstacle to many potential home sales.”

Before 2009, the index had never hit 70 percent and rarely topped 65 percent, the association said. Last quarter was the eighth straight quarter the index was above 70 percent.

Three states dominated among the top 10 most affordable metropolitan areas overall: Indiana, Michigan and Ohio. Elkhart-Goshen, Ind., ranked highest, with 97 percent of its homes affordable to a family making the area’s median income. All but one (Indianapolis-Carmel, Ind.) among the top 10 had populations under 500,000.

10 most affordable metro areas

Elkhart-Goshen, Ind. 97% $58,600 $104,000
Lansing-East Lansing, Mich. 96.7% $65,900 $86,000
Kokomo, Ind. 96.5% $61,400 $80,000
Mansfield, Ohio 96.3% $55,100 $75,000
Bay City, Mich. 96% $56,200 $80,000
Cumberland, Md.-W.Va. 95.3% $52,200 $88,000
Springfield, Ohio 94.3% $56,800 $75,000
Flint, Mich. 94.2% $56,500 $82,000
Sandusky, Ohio 93.7% $64,000 $101,000
Indianapolis-Carmel, Ind. 93.5% $68,700 $106,000

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