Low Mortgage Rates + Inexpensive Homes = Extremely Affordable Housing

Look around.  Home prices are still low (all things relative) and mortgage rates are ridiculous. It’s no surprise that home affordability is high right now.

Home Affordability Hits All-Time Highs

It wasn’t supposed to be like this.  Housing was supposed to have recovered and mortgage rates were supposed to have risen.  But they haven’t.  And it’s creating an opening for today’s buyers.

According to the Home Opportunity Index, a quarterly report joint published by the National Association of Home Builders and Wells Fargo, more than 72 percent of all new and existing homes sold between January-March 2010 were affordable to families earning the national median income.

It’s the second highest reading in the survey’s history.

Where Are Homes Most (And Least) Affordable?

Bay City, Michigan topped the 2010 First Quarter affordability list. 98.7% of homes sold there were affordable for families earning the area’s median income. The rest of the Most Affordable are similarly “small towns”.

For bigger-city living, Indianapolis clocked in at the top.  95% of all homes sold in Indianapolis are affordable to the city’s median income earners.

Other noteworthy rankings include:

At the bottom of the affordability list is the New York-White Plains, NY-Wayne, NJ region.  Just 20.9% of homes are affordable to families earning the local median income.

The affordability rankings of all 225 metro areas are available on the NAHB website. See where your town ranks and remember — even if your city is near the bottom of the list, relative, affordability is very, very high.

Beware: Affordability Is Often Fleeting

Homes are affordable because of the unique state of the economy right now.  In other words, it won’t likely last.

Home values are recovering in many markets and mortgage rates can’t stay this low forever. It’s unnatural. All things equal, buying a home may never come this cheap again.

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