Every month, we get the new housing stats. Stats about everything: starts, permits, vacancies, ownership levels, mortgage rates, foreclosures, and of course, inventory levels.
It seems there’s an entire segment of the industry, and especially the government, responsible for reporting all these statistics. And those are the factual statistics. Just as often we hear ‘experts’ talking about all the trends and forecasting for the future. I heard someone talking about the expected housing starts in Canada for 2015. Really? Who cares? Aren’t we all trying to ensure that 2012 is actually the recovery year?
There are some interesting facts that we should pay attention to. The NAHB/Wells Fargo Housing Opportunity Index (HOI) seems like a reasonable indicator to how your market is doing. According to the HOI, nationwide housing affordability is at a record high. But tight lending conditions continue to create a significant roadblock for many homebuyers.
- 77.5 percent of all new and existing homes sold in this year’s first quarter were affordable to families earning the national median income of $65,000. This beats the previous record set in the final quarter of 2011, when 75.9 percent of homes sold were affordable to median-income earners.
“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, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. “Without this significant hurdle, the housing and economic recovery could be proceeding at a much stronger pace.”
The most affordable major housing market was Indianapolis-Carmel, Ind., where 95.8 percent of homes sold during the period were affordable to households earning the area’s median family income of $66,900.
Also ranking among the most affordable major housing markets were:
- Dayton, Ohio
- Lakeland-Winter Haven, Fla.
- Modesto, Calif.
- Grand Rapids, Mich.
- Buffalo-Niagara Falls, N.Y
Among smaller housing markets, Cumberland, Md.-W.Va. topped the affordability chart. There, 99 percent of homes sold during the first quarter were affordable to families earning the area’s median income of $53,000.
Other smaller housing markets at the top of the index include:
- Fairbanks, Alaska
- Wheeling, W.Va.
- Kokomo, Ind.
- Davenport-Moline-Rock Island, Iowa-Ill.
In New York-White Plains-Wayne, N.Y.-N.J., which retained the title of the least affordable major housing market for a 16th consecutive quarter, just 31.5 percent of homes sold in the first three months of this year were affordable to those earning the area’s median income of $68,200.
Other major metros at the bottom of the affordability chart included:
- San Francisco-San Mateo-Redwood City, Calif.
- Los Angeles-Long Beach-Glendale, Calif.
- Santa Ana-Anaheim-Irvine, Calif.
Ocean City, N.J., was the least affordable smaller housing market on the list, with 45.9 percent of homes sold in the first quarter affordable to families earning the median income of $71,100.
Other small metros at the bottom of the list included
- Santa Cruz-Watsonville, Calif.
- San Luis Obispo-Paso Robles, Calif.
- Santa Barbara-Santa Maria-Goleta, Calif.
- Laredo, Texas
So what does this mean to a building industry marketer? Focus on a few items that make sense. This study looks at houses being built and their relative affordability in that specific market. This tightly focused look at housing in a market is helpful. Don’t get sidetracked on issues that you can’t impact or change.
Please visit www.nahb.org/hoi for tables, historic data and details.