The 15 American Housing Markets That Are Currently More Affordable Than They Were in 2005

In many parts of the United States, homeownership is now unaffordable due to rising home prices and mortgage rates. In fact, home prices have increased by 20% over the past year, and mortgage rates have increased from about 3% to about 6% this year, with some experts predicting they will continue to rise (see the lowest mortgage rates here you may qualify for here). And while there are some notable exceptions, the vast majority of American counties are currently less affordable than they were in the past.

In fact, compared to averages starting in 2005, median home prices are now less affordable in 560 of the 575 counties examined in the Q2 2022 US Home Affordability Report by real estate data company ATTOM. With a 20 percent down payment and a 28 percent maximum debt-to-income (DTI) ratio, the report calculated the amount of income required to cover the major monthly home ownership expenses, such as the mortgage, property taxes, and insurance, for a single-family home with a median price. (To determine your DTI, add up all of your monthly expenses, such as insurance and mortgage payments, and divide the sum by your gross monthly income. The resulting percentage will represent your DTI.)

“Very few local markets have been able to avoid the recent sharp increases in home prices. Things become less affordable when costs rise and pay does not keep up, according to Elizabeth Renter, a data analyst at NerdWallet. So where exactly are these places that people supposedly have the means to live?

10 counties where prices have decreased since last year

According to Jeff Ostrowski, an analyst for Bankrate.com, the most affordable counties are frequently found in Rust Belt regions with slow rates of population and job growth and consequently little new demand for housing.

However, it’s crucial to keep in mind that these counties are the exception rather than the rule. Most counties generally have worse housing affordability than the national average because of a variety of factors, according to Ostrowski. He adds that there are numerous causes, such as a shortage of inventory and rising mortgage rates. And according to Ostrowski, “home values have grown faster than wage growth over the past two years” and “property prices have been soaring pretty much everywhere.” Los Angeles County, California; Maricopa County, Arizona; San Diego County, California; Orange County, California; and Kings County, New York are a few of the most expensive large counties.

It should be noted, however, that “worsening affordability appears to be having an impact on demand, which could lead to prices plateauing or even modestly correcting in some markets. Many prospective buyers might decide to keep renting while the market is in flux. According to Rick Sharga, executive vice president of marketing at ATTOM, “others may adjust their sights and look for smaller properties or homes that are further away from major metro areas.”

Read the full story from Market Watch.

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