Lima, Ohio Rated Most Affordable U.S. Housing Market In Third Quarter Of 2004

January 7, 2005

Lima, Ohio, is the nation’s most affordable housing market, according to the newly revised National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) for the third quarter of 2004. The HOI also reveals that, on a nationwide basis, housing affordability has declined substantially since the beginning of 2004.

“Despite some of the best financing conditions in decades, housing affordability at the national level has fallen to the point that only a little more than half (50.4 percent) of all homes sold in this country during the third quarter of 2004 were affordable to families earning the median U.S. household income,” said NAHB President Bobby Rayburn, a home and apartment builder from Jackson, Miss. “This compares to about 61 percent of homes sold that were affordable to median income earners in the year’s first quarter.”

Strong home-price appreciation, which has outpaced income growth in many areas, was the main factor for slipping affordability.

“In many markets, working families are finding it considerably more difficult to afford homes today than they did at the start of 2004,” Rayburn noted. “Ultimately, higher home prices are a matter of strong buyer demand. But a big contributor has been a shortage of land available for development due to growth controls, and the high cost of regulations in general. This includes everything from excessive impact and utility hookup fees to the price of long delays for subdivision approvals. Local jurisdictions that have curtailed production of affordable and workforce housing through excessive regulations should consider this a wakeup call.”

At the top of the latest affordability rankings was Lima, Ohio, where 90.5 percent of homes sold during the third quarter were affordable to families earning the area’s median income of $52,500 with current mortgage financing conditions. The median sale price of all homes sold in Lima during that period was $82,000. This marks a slight decline in affordability since the first quarter of 2004, when 92.4 percent of homes sold in Lima were affordable to median-income earners and the median sale price was just $78,000.

Lima is among the smallest metros ranked by the HOI, with fewer than 250,000 people. Ranked just after Lima for affordability in the small cities category were Cumberland, Md., and Mansfield, Ohio. Among mid-sized cities (with 250,000 to one million people), Saginaw- Bay City-Midland, Mich. was the most affordable housing market and the second-most affordable overall. It was followed by the mid-sized markets of Lansing-East Lansing, Mich. and Canton-Massillon, Ohio. Among major metros with populations over one million, Grand Rapids-Muskegon-Hollad, Mich., was tops for affordability, followed by St. Louis, Mo.

Earning the dubious honor of least affordable housing market in the third quarter was the metro area encompassing Santa Barbara, Santa Maria and Lompoc, Calif., where less than 5 percent of homes sold were affordable to families earning the median household income of $64,700 and the median sales price was $447,000. This marks a substantial drop in affordability since the first quarter of 2004, when the median price was $380,000 and nearly 11 percent of homes sold were affordable to median-income earners.

San Francisco, which has previously held the title of least affordable housing market, still had the highest median sale price of the 163 metro areas that were ranked. However, that city’s high median household income, of $95,000, kept it slightly higher on the list, as the nation’s 11th least affordable housing market.

“All of the 10 least affordable housing markets – and 19 of the 25 least affordable – are in California, which is one of the most highly regulated areas in the country,” Rayburn said.

The most affordable housing markets by region were: Lima in the Midwest; Cumberland, Md. in the South; Pueblo, Colo. in the West; and Harrisburg-Lebanon-Carlisle, Pa., in the Northeast. The least affordable markets by region were: Chicago in the Midwest; Naples, Fla. in the South; Santa Barbara in the West; and Nassau-Suffolk, N.Y. in the Northeast.

Source: National Assoication of Home Builders

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