Indy tops list of most affordable ZIP codes in US

Trulia data show California, New York homes are least affordable

Finding an affordable home to buy should be easier than discovering buried treasure. But for many homebuyers – especially first-timers – it’s doesn’t feel that way.

The lack of affordable homes has been a persistent problem in the housing market. In the first quarter, inventory rose 2.4% from a year earlier, according to the National Association of Realtors. But it’s still well below normal, and that’s vexing homebuyers.

To unearth low-cost homes, USA TODAY tapped Trulia to look at the largest 50 U.S. metro areas and identify ZIP codes where homes are affordable relative to the median metro income.

Here’s the hopeful news for buyers.

In 43 metro areas, at least half the homes in the

majority of ZIP codes were considered affordable. There were 604 ZIP codes – or 6.8% of all ZIP codes – where all of the homes were affordable. There were just 288 ZIP codes, or 3.3%, where none of the homes were considered affordable.

“It’s interesting that so many ZIP codes fall into one of those extreme buckets,” said Cheryl Young, senior economist at Trulia.

What makes a ZIP code affordable?

Neither housing stock age nor distance from the city center seemed to be strong drivers of affordability, Young said.

“That’s likely because there may be a premium to live near the center of a metro as well as a premium to live in tony suburbs,” Young said, “and (while) older housing stock may reduce home values, there are also highvalue neighborhoods with well-maintained older estates and homes.”

Trulia didn’t dig into other factors that could determine the desirability of a ZIP code and, therefore, the value

of the housing inventory, such as performance of nearby schools, proximity to shopping and restaurants, and access to major commuter roads.

What is affordable?

Trulia took the current value of all homes in the largest 50 metro areas and calculated how much the median income could afford by ZIP code. Homes were considered affordable if 30% or less of the metro area’s median monthly income went to the mortgage payment.

To find the share of affordable homes on the market, Trulia calculated the maximum amount that the median income could allocate toward a mortgage payment. Calculations considered a 20% down payment, and the monthly mortgage payment also included property insurance and taxes.

It’s important to note that many homebuyers, notably first-time buyers, contribute less than 20% toward their home purchase. That would increase their monthly mortgage payment on the same home bought with 20% down. Additionally, those buyers would have to pay private mortgage insurance, another monthly cost. The number of ZIP codes with affordable homes would also shrink for those buyers, Young said.