IRVINE, CA—The best markets in the country for both affordable home buying and job climate are in the middle of the country, says Daren Blomquist, VP for RealtyTrac. The firm recently released a report about the affordability of housing in various counties throughout the country.
As GlobeSt.com reported last week, national housing prices have increased to the point where 34% of US county housing markets are now less affordable for buying than their long-term averages, according to a RealtyTrac‘s report. The firm found that as of the second quarter, one-third of the counties analyzed have surpassed their historical averages for income-to-price affordability percentages since 2000, making them less affordable now than they have been on average over the last 14 years.
The report calculated both the percentage of median income needed to make monthly payments on a median-priced home in each county in May and the historical trend in each county’s income-to-price affordability percentage going back to January 2000. It also analyzed the impact of rising interest rates on affordability, calculating the percentage of median income needed to make payments on a median-price home if interest rates rise by a quarter percentage point, a half percentage point, three-quarters of a percentage point or a full percentage point.
“Buyers looking for markets with a combination of affordable housing and a good job climate will find those mostly in the middle of the country, in places such as Columbus, OH; Oklahoma City; Omaha; Des Moines; and Minneapolis, all of which have counties where 20% or less of the median income is needed to buy a median-priced home and where unemployment rates are 5% or lower,” says Blomquist.
Blomquist tells GlobeSt.com, “Unemployment and affordability are two discrete factors that prospective buyers and investors should consider in concert as good barometers of the health of the housing market in any given region. These two factors don’t seem to necessarily directly impact each other. There are many affordable markets with high unemployment rates, and many with low unemployment rates. Conversely, there are many unaffordable markets with low unemployment rates, and many with high unemployment rates.”
He adds that good affordability alone does not qualify a market as a good place to buy, and low unemployment rates alone do not qualify a market as a good place to buy or invest, but markets where these two factors are together provide a much better portrait of a market’s health. “Markets that are both affordable and have low unemployment are prime places to look to buy or invest. Most of these markets are in the Midwest.”
There were 831 counties in the study with a combined population of 44 million with an average historical income-to-price affordability percentage of 15% or less. Counties in this consistently affordable category included Wayne County, MLI; Marion County, IN; Monroe County, NY; Baltimore City, MD; and Montgomery County, OH.
The report also looked at markets with the favorable combination of low income-to-price affordability percentages and low unemployment rates. Counties in this affordable-with-jobs markets category included Franklin County, OH; Oklahoma County, OK; Tulsa County, OK; Summit County, OH; Douglas County, NE; Greenville County, SC; and Polk County, IA.