Kansas City Heads List Of Low-Cost Housing Markets It’s The First Time In At Least Four Years That A Major Metropolitan Area Has Been The Least Expensive
Finally, you don’t have to move to a small town for an affordable home. For the first time in at least four years, a major metropolitan area - Kansas City - is the nation’s most affordable place to live.
San Francisco remains unchallenged as the least affordable - last on the list of 191.
One other major Midwestern housing market, Minneapolis, was among the 10 most affordable during the July-September quarter, the National Association of Home Builders said Wednesday.
The report came as no surprise to Kansas City. The average home in the area, which covers the two Kansas Cities in Missouri and Kansas as well as suburbs in both states, is $84,000.
“We are a very unique market,” said Ben Cerra, president of the Home Builders Association of Kansas City. “Buyers get more in the terms of style and value. We tend to be individuals and put our own touches on homes, adding to the creativity that home buyers like.
“You don’t see tract houses in Kansas City in any price range.”
The Kansas City area, with a 1.6 million population, was the first metropolitan area of more than 1 million people to top the Home Builders’ Housing Opportunity Index since it was created four years ago.
Still, the most affordable homes continue to be found in smaller markets, many of them concentrated in the Midwest, while the least affordable are in larger areas, particularly on the East and West coasts.
“There are pockets of affordability throughout the country,” said association president Jim Irvine, a builder from Portland. “When interest rates move down, like they did in the third quarter, then housing affordability is enhanced everywhere.”
The survey covered 436,000 sales of new and existing single-family homes in 191 metropolitan areas, but not Spokane.
With San Francisco dead last, seven other markets with populations over 1 million were among the 25 least affordable: New York; Portland; San Jose, Calif.; San Diego; Oakland, Calif., and Los Angeles.
Previously, Binghamton, a metropolitan area of 264,000 in southern New York, had the most affordable housing. Other recent top markets were Elkhart, Ind., population 41,000; Lima, Ohio, population 154,000, and Kokomo, Ind., population 97,000.
Gopal Ahluwalia, a Home Builders economist who conducts the surveys, said Kansas City’s top ranking was due to two things.
“Home prices, which in some parts of the country moved up, didn’t in Kansas City,” he explained. “And the median income in Kansas City, $44,600, was well over the national median of $40,200.”
Ahluwalia attributed the lower costs there to cheaper prices for land, usually one-fifth of the price there and one-fourth elsewhere.
Twelve of the most expensive markets were in California and one each were in Hawaii, Nevada, New Mexico, Utah, Oregon and Washington state.
Topping the regional lists of most affordable markets were Kansas City in the Midwest; Binghamton in the Northeast; Jackson, Miss., in the South and Bakersfield, Calif., in the West.
The least affordable markets in each region were New York in the Northeast; Chicago in the Midwest; Laredo, Texas, in the South, San Francisco in the West.
The Housing Opportunity Index measures the proportion of homes sold in a specific market that a family earning the median income in that market could afford to buy. It takes into consideration property tax and insurance rates in each area.
The median home price in Kansas City was $84,000, meaning a family earning the median income of $44,600 could afford 86.2 percent of the homes sold during the third quarter.
The highest median sale price was in San Francisco, $285,000. A family earning the median income of $58,800 there could afford only 19.3 percent of the homes.
Nationally, a family earning the national median income of $40,200 could afford to buy 61.3 percent of the homes sold during the quarter.
The Home Builders said an increase in the national median price, to $118,000 from $117,000 in the second quarter, was offset by lower interest rates.
The average interest rate used in the index fell to 7.73 percent from 7.99 percent. The rate is a weighted average of adjustable-rate and fixed-rate loans.
xxxx AFFORDABILITY GAP Here are the most and least affordable U.S. housing markets and the percentage of homes sold in each area that were within reach of the median household income:
Most affordable Kansas City, 86.2. Binghamton, N.Y., 83.9. Elkhart, Ind., 83.8. Lincoln, Neb., 82.3. Lima, Ohio, 82.1.
Least affordable San Francisco, 19.3. Salinas, Calif., 27.4. Laredo, Texas, 27.7. Honolulu, 31.0. Santa Rosa, Calif., 31.3.
Associated Press