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Midwest Housing Most Affordable Washington And Other Western States Are Well Down On Latest Home Builders Survey

Thu., Jan. 5, 1995

Lima, Ohio, and San Francisco are divided by three-fourths of a continent, and the difference between the ability of their citizens to buy a home is just as wide.

The National Association of Home Builders reported Wednesday that Lima was at the top of its Housing Opportunity Index during the July-September quarter. San Francisco was at the bottom.

The index measures the proportion of homes sold in a market that a household earning the median income in that market could afford to buy. The median is the midpoint, meaning that half of the homes cost more and half cost less.

As in other surveys in recent years, the most affordable markets were primarily in the Midwest and South. The least affordable were in the West, particularly California, and the Northeast.

In fact, 15 of the 25 most affordable markets were in the Midwest. Five more were in the Northeast and five were in the South.

Fourteen of the least affordable markets were in California and one each in Hawaii, Nevada, New Mexico and Oregon. Four more were in the Northeast and three in the South.

Seattle, Tacoma and Yakima, which ranked 131, 142 and 155, respectively, were the only Washington cities included in the survey.

Spokane, although excluded, is more affordable on a separate scale used by the National Association of Realtors.

No Idaho city was included in the Home Builders survey of 500,000 sales of new and previously owned homes in 185 metropolitan areas.

“There’s no doubt that higher interest rates are affecting housing affordability conditions in every region of the country,” said association President Tommy Thompson, an Owensboro, Ky., builder. “But rates are still in the single digits, making affordability relatively healthy.”

Interest rates rose to 7.72 percent in the third quarter, from 7.42 percent in the second. The rate is a national, weighted average of adjustable and fixed-rate loans.

But rising rates recently have begun to slow the housing market by boosting borrowing costs. Purchases of new homes in November fell for the first time in five months, while sales of previously owned homes plunged to the lowest level in 17 months.

Lima, which was the 11th most affordable market in the second quarter, posted an 87.4 on the third-quarter index. That meant a family earning the median income of $38,600 could have purchased 87.4 percent of the homes sold in the area during the quarter.

But San Francisco had a 17.8, meaning a family earning the median of $57,600 could afford to buy just 17.8 percent of the homes available. San Francisco has been at the bottom of the index since it was created in the first quarter of 1991.

Besides Lima in the Midwest, the most-affordable markets by region were Albany, N.Y., in the Northeast; Houma, La., in the South; and Pueblo, Colo., in the West.

In addition to San Francisco, the least-affordable by region were Des Moines, Iowa, in the Midwest; New York in the Northeast; and Laredo, Texas, in the South.

The nation as a whole posted a 61.7 on the third-quarter Housing Opportunity Index, up from 60.0 from April through June.

The median income was $39,900 in both quarters, although the median price in the third period rose to $117,000 from $114,000 in the second.

But the third-quarter index measured for the first time differences in rates for property taxes and insurance, which were not available previously. The change resulted in some different affordability rankings.

Housing affordability declined in some states such as Michigan, which has very high tax rates. In fact, Jackson, Mich., which had ranked as the nation’s most affordable area in both the third and fourth quarters of 1993, was not even in the top 25 in the July-September quarter.

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