BluefoxToday blog : Housing wrestles with affordability issue

Housing wrestles with affordability issue

In multiple areas nationwide the residential real estate market remains soft and offers home buyers splendid opportunities. Prices are coming down and many sellers are at last realizing that the marketplace determines the listing price and not them. They are now more willing to negotiate rather than just turn down unappealing offers. And mortgage interest rates in recent weeks have reached new lows, hovering right around 5.5%. These developments should be boosting transaction activity, but are they making as big a difference as expected?

The word affordability plays a large role in that. The Center for Housing Policy conducted a study on the very issue and according to its findings things are getting a bit better. Some noteworthy advances have been made in the expensive areas like California, Arizona and Florida, which also happen to be the states where prices rose really fast during the boom years. They are also three of the four leading mortgage foreclosures states, with Nevada being the fourth. So it makes market sense that prices are now receding in them and helping out with the affordability assessment.

Despite the marginal improvement, the working families are the ones who still face a shortage of homes they can manage to get a mortgage for. Workers like registered nurses, retail sales persons and customer service representatives - all deemed high-growth occupations - are simply priced out in many regions. In the Center for Housing Policy's report registered nurses, for instance, can't afford a median-priced house in 108 out of the 201 markets the study looked at. And customer service reps were left out in 185 markets.

Las Vegas mirrors pretty much the national trend. Prices soared a few years ago to unprecedented highs and are now retreating, narrowing the affordability gap that grew way out of control. Stagnant home sales in the valley will improve as soon as median household incomes and home prices come closer together, reaching a comfortable and workable balance. Bulk of the adjustment has to come from the price sector because wages predictably increase at a slow pace. There already are small single-family houses on the market for under $200,000, indicating that the affordability issue is getting corrected here. 




Provided by: 

Esko Kiuru
Mortgage, real estate and apartment industry analyst - syndicated mortgage, housing and property management blog
My cell: 702-499-1006

Comment balloon 10 commentsEsko Kiuru • January 30 2008 09:46PM


Esko, in the Dallas Ft. Worth area we are counter to the coastal areas with VERY affordable housing. We still have foreclosures, and have been affected by ARMs and sub-prime like everyone else, but because we didn't have any big runup in prices, the homes are still extremely affordable relative to the incomes of the area. The money just goes a lot further. I think the allure of being near oceans have kept prices climbing on the east and west coasts and resort towns like Las Vegas. Now with incomes flat the prices are out of reach for many.

Our median price in Dallas for example is around $146,000. In the suburbs it is around $192,000. This is for large houses too.

Posted by Gary Woltal, Assoc. Broker Realtor SFR Dallas Ft. Worth (Keller Williams Realty) about 12 years ago

Affordability is a big issue in my market, I just went to an economic conference and that is what they picked out as a big issue keeping our market low.

Take care!


Posted by Robert Huntsinger, Empire Realty Upland, CA - Full Service at a Discount (Empire Realty) about 12 years ago
Esko:  I must tell you that the single family homes on the market under $200K with little rehab in the most desirable areas are getting multiple offers and are having the prices driven upward.   It's a challenge right now to find a bargain house that will work for a client's needs.
Posted by Renée Donohue~Home Photography, Western Michigan Real Estate Photographer (Savvy Home Pix) about 12 years ago


Vegas used to be affordable, then the boom inflated the prices and now we are going back towards being at least somewhat affordable again.

Posted by Esko Kiuru about 12 years ago


California has a major issue with affordability right now.

Posted by Esko Kiuru about 12 years ago


That's good to hear that at least one segment of the market is active.

Posted by Esko Kiuru about 12 years ago
Esko, here in Connecticut our median price in 2007 was 3% higher than 2006, but number of sales was down about 12%.
Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) about 12 years ago


Your market is holding up rather well, compared to Las Vegas for instance.

Posted by Esko Kiuru about 12 years ago

Well said. Affordability is the new word of the times. In Vallejo, CA last year I had I single income buyer with great credit that could realistically only afford a home below $350,000. Homes that were visually appealing and structurally sound were a rare find. Now there are over  120+ homes that are under $250,000  on the market. Many are questionably sound and lack any visual appeal. Basically, the market has changed considerably. Prices are low /interest rates are down.

One problem Sellers that have tapped the equity out of their property and really don't want to prepare the home for a competitive market or they are still expecting to walk away with cash.

Posted by Dionne Morgan, Broker REALTOR ,GRI, e-PRO (Realty World Solano Realty) about 12 years ago


Las Vegas is grappling with affordability big time and you are, too. Major issue right now.

Posted by Esko Kiuru about 12 years ago