The least af­ford­able hous­ing mar­kets aren’t where you think

New Haven Register (Sunday) (New Haven, CT) - - REAL ESTATE - By Justin Fox RE­CENT AREA HOME SALES Justin Fox is a Bloomberg Opin­ion colum­nist cov­er­ing busi­ness. He was the editorial di­rec­tor of Har­vard Busi­ness Re­view and wrote for Time, For­tune and Amer­i­can Banker. He is the au­thor of “The Myth of the Rational M

Bloomberg Opin­ion — Where is hous­ing least af­ford­able in the U.S.? The most cited mea­sure was long the Na­tional As­so­ci­a­tion of Real­tors’ af­ford­abil­ity in­dex, which tracks whether me­dian-in­come fam­i­lies can qualify for mort­gages on me­dian-priced homes.

Ac­cord­ing to that, the least af­ford­able mar­ket as of 2016 was San Jose-Sun­ny­vale-Santa Clara (aka Sil­i­con Val­ley) in North­ern Cal­i­for­nia, fol­lowed by Anaheim-Santa Ana-Irvine in South­ern Cal­i­for­nia (aka Orange County) and San Fran­cisco-Oakland-Hay­ward just to Sil­i­con Val­ley’s north.

Re­cently the NAR has shifted to an af­ford­abil­ity dis­tri­bu­tion score that mea­sures the per­cent­age of for-sale homes in an area that a fam­ily with a me­dian in­come can af­ford: In that, the Los An­ge­lesLong Beach-Anaheim metropoli­tan area (yes, they group Los An­ge­les and Orange County to­gether for one mea­sure but not the other) was least af­ford­able as of Septem­ber, with neigh­bor­ing San Diego-Carls­bad and Ox­nard-Thou­sand Oak­sVen­tura in sec­ond and third, San Jose fourth, and San Fran­cisco and Honolulu tied for fifth.

The real es­tate site Zil­low, mean­while, has a mort­gage af­ford­abil­ity in­dex that as of Septem­ber ranked San Jose worst for af­ford­abil­ity, fol­lowed by nearby Santa Cruz and San Fran­cisco and then the Los An­ge­les area.

Hey, but what about renters? They’re in the mi­nor­ity among Amer­i­cans, with 64.4 per­cent of U.S. hous­ing units oc­cu­pied by own­ers in the third quar­ter of 2018, ac­cord­ing to the Cen­sus Bureau’s lat­est home­own­er­ship re­port. In metropoli­tan Los An­ge­les and New York, though, renters ac­count for 52.7 per­cent and 51.2 per­cent of house­holds re­spec­tively.

They also make up more than 40 per­cent of house­holds in sev­eral other big metro ar­eas, in­clud­ing San Fran­cisco, San Jose, Or­lando, Mi­ami and San Diego. Also, renters tend to be poorer than home­own­ers are. The me­dian in­come of renter house­holds was an es­ti­mated $38,944 last year; for home­owner house­holds, it was $75,876. The peo­ple for whom hous­ing af­ford­abil­ity is the most press­ing is­sue would thus seem to be renters, not own­ers.

Zil­low does track rental af­ford­abil­ity, too. But I’m go­ing to go with the Cen­sus Bureau’s me­dian gross rent as a per­cent­age of house­hold in­come, in part be­cause it compares rents to renters’ in­comes, not ev­ery­body’s. This of­fers an in­ter­est­ingly dif­fer­ent per­spec­tive.

Those aren’t all ex­pen­sive Cal­i­for­nia glam­our spots. Of the four large U.S. metropoli­tan ar­eas with the low­est me­dian house­hold in­comes, in fact, three (New Or­leans, Tuc­son and Tampa) made it onto this chart. Mi­ami and Or­lando are also in the bot­tom 10 for in­come out of the 53 metropoli­tan ar­eas with 1 mil­lion peo­ple or more; Rochester is 12th from the bot­tom.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.