Inspired by a recent post by Buffalo Niagra Enterprise on the region’s positive housing and economic outlook, I was curious to see how housing affordability has changed in the past few years in cities across the U.S.
The NAHB/Wells Fargo Housing Opportunity Index is the measure of choice. It tracks the percentage of homes (on a scale from 0 to 100) sold within a city within each quarter that were affordable to families earning the local median income. “Affordable” homes are defined as those whose annual mortgage costs don’t exceed 28% of that local median income. So, a HOI of 100 means that ALL homes sold within that quarter were affordable, while an HOI of zero means that none were.
The colorful mess below tracks the HOI index (or percentage of sold homes that were affordable to median income earners) on a quarterly basis since mid ’08 for 228 U.S cities. You can see on the left-hand side of the graph that many cities, particularly those who started in Q3 of 2008 with an HOI at 60 or below, that there was a sharp increase in home affordability through the first quarter of 2009, followed by a more plateaued but steady rise through mid-2012.
Overall, housing affordability has improved dramatically since mid-2008, from a national average HOI of 56.1at that time, all the way up to 73.8 in mid-2012. That’s a 30% increase!
Below is a map of those 226 urban areas, color-coded by their Q2-2012 HOI value. Click on each city of interest to see how home affordability has changed since mid-2008.
I know this map is far from perfect, with large gaps in representation from some Midwestern and Southeastern states. But alas, any map is only as good as the available data it represents. The cities with relatively low levels of affordable housing tend to be coastal, while the most affordable cities (with an HOI of 90+) are concentrated in the rust belt/eastern-Midwest/mid-Atlantic region. You can check out data for other indicators of affordability here.