Housing affordability: Detroit, San Francisco at ends of spectrum
Mar 25, 2015, 9:51 AM | Updated: Oct 10, 2024, 1:59 pm
A look at housing affordability across the country paints a picture of stark contrasts, according to realtor.com’s new Mortgage Affordability Report.
The report, which gauged affordability in 25 of the largest housing markets, found Detroit to be the most affordable housing market this year where homebuyers likely would only need 13.2 percent of the median income there to buy a home.
On the other end of affordability is San Francisco, where buyers need 72 percent of their median income to afford a home – more than double the 28 percent mortgage-to-income ratio threshold often considered financially healthy.
“Over the past 10 years, we have seen marketplace gyrations ranging from bubble to burst; recovery to stabilization,” said Jonathan Smoke, realtor.com’s chief economist. “We are now seeing a market of extremes on the affordability front. Buyers, especially first-time homebuyers, might feel more motivated as the overall market continues to improve. This report provides buyers with local insight that is both informative and instructive.”
Nationwide, by the end of this year, households will likely need to spend 27.6 percent of the median family household income of $55,533 to purchase a median priced home with a 30-year fixed-rate mortgage, according to the report. Rents are expected to require 29.5 percent of income.
“Affordability is greatly impacted by mortgage rates, so waiting a year to buy as affordability declines may force home buyers to consider alternative options such as hybrid-adjustable mortgages that have lower rates,” Smoke said.
