Nationally, housing affordability at near its highest point in nineteen years, wehn an index created by the National Association of Home Builders and Wells Fargo was created. The index measures the percentage of houses that a family with the median income can afford to buy, and nationally, "72.2 percent of all new and existing homes sold in the first quarter of 2010 were affordable to families earning the national median income of $63,800."
The most affordable major housing markets were: Indianapolis-Carmel and Youngstown-Warren-Boardman, Ohio-Pa., each of which had 95% affordability. Runners up on the affordability list were Syracuse, N.Y.; Dayton, Ohio; and Grand Rapids-Wyoming, Mich.
Small housing markets that were even more affordable than these were: Bay City, Mich. (98.7%), Kokomo, Ind.; Davenport-Moline-Rock Island, Iowa-Ill.; Sandusky, Ohio; and Elkhart-Goshen, Ind.
At the other extreme, the least affordable housing market was: New York-White Plains-Wayne, N.Y.-N.J., . . . where slightly less than 21 percent of all homes sold during the quarter were affordable to those earning the New York area’s median income of $65,600. Runners up on the unaffordable list were San Francisco; Honolulu; Santa Ana-Anaheim-Irvine, Calif.; and Los Angeles-Long Beach-Redwood City, Calif.
The least affordable smaller markets were: San Luis Obispo-Paso Robles, Calif.; Ocean City, N.J; Santa Cruz-Watsonville, Calif.; Napa, Calif.; and Flagstaff, Ariz.
Affordability in Colorado
Many of Colorado's main housing markets are more affordable than the national average. They are from most to least affordable: Pueblo (86.7%), Colorado Springs (78.9%), Fort Collins-Loveland (76.3%), and Denver-Broomfield-Aurora (73.8%). Colorado markets that are less affordable than the national average are Greeley (67.4%) and Boulder (65.2%).
The unaffordability ranking for Greeley is mostly a statistical fluke in a model that assumes that people who work in a housing market also live there, when in fact, Greeley is increasingly an I-25 corridor bedroom community whose residents mostly work in other metropolitan areas, but has a low wage, agricultural center based local economy.
Denver reached its least affordable point on the index in the history of the index in 2000 when it was 49.9% in its lowest quarter (and yes, it just happens that I bought my home in 2000). Denver homes reached there most affordable level (79.0%) since the first quarter of 1994 in the first quarter of 2009. Since then, Denver housing prices have recovered somewhat (from a brief low of $178,000 in the first quarter of 2009), while the median income in Denver has remained constant.
Writ large (and going beyoond the index's numbers), Denver's real estate market can be described a long recover from a bottom around 1983 in the wake of the 1982 oil shale bust at a time when Denver's economy was largely oil industry driven through 2000 when it had jumped onto the tech boom that was sweeping the country. The tech bust of 2001 took some of the luster off the Denver real estate market, which was followed by a period of stablity, rather than a major boom or a major bust. The most recent financial crisis was a bump in the market for Denver real estate, but that impact peaked about a year ago, and Denver real estate is now about a year into a recovery phase, although still not back to its peak levels.
In terms of raw housing prices, not adjusted for local incomes, Boulder is the most expensive major housing market (median price $281,000) not located on or very near the Atlantic or Pacific Coasts. Inland runners up are Flagstaff, Arizona ($249,000), Sante Fe, New Mexico ($248,000), Fort Collins-Loveland ($208,000), Provo-Orem, Utah ($207,000), Denver-Aurora-Broomfield ($205,000), and Salt Lake City, Utah ($203,000).
Analysis
The bottom line is that the Rust Belt is affordable, while greater New York City and California are not. The housing bust finally broke California's long trend of being more unaffordable than New York City which was also impacted, but less severely.
Some of the Rust Belt's apparent affordability may be a function of median income statistics not keeping pace with recent trends or not factoring in high unemployment rates.
The California still unaffordable figures suggest that the housing bust there has not yet run its course, perhaps as a result of a cautious approach being taken by the state's banks who have often refrained from foreclosing when they have the right to do so.
Ohio is home to many of the places with the least expensive houses (which is what matters to people who are retired or otherwise do not have incomes tied to the local economy) including the following markets shown with their median home sales prices: Youngstown-Warren-Boardman, Ohio-Penn. ($69,000), Wheeling, West Virginia-Ohio ($74,000), Canton-Massillon, Ohio ($75,000), Lima, Ohio ($75,000), Mansfield, Ohio ($77,000), Springfield, Ohio ($78,000), Toledo, Ohio ($81,000), Dayton, Ohio ($88,000), and Sandusky, Ohio ($90,000).
One surprise from the point of straight economics is that Ohio, and other Rust Belt cities have not attracted the influx retirees who jumped in as bargain hunters in Grand Junction, Colorado when houses suddenly became cheap there following the oil shale bust.
Chilly weather, hot humid summers, and a lack of a sense of safety (supported by crime statistics) in former Rust Belt centers probably go a long way towards explaining these factors. A sustained, slow economic decline is a lot uglier than a sudden economic collapse that makes it clear to those laid off that their only economic hope is to move immediately. Part of what allowed Grand Junction to transition relatively seemlessly from an oil based economy to a non-oil based economy is that oil workers, many of whom had not had much time to set down roots in the area during the oil shale boom, promptly gave up hope.
In the right circumstances hope can be a powerful force for recovery. But, in the face of inevitable economic decline, hope can be counterproductive because it gets in the way of abandoning a failing paradigm for what a city is about, and replacing it with a new orientation.
Perhaps letting Chrysler fail, rather than reorganize, would have actually done more economic good in the long term than the what was down in bailing it out and reorganizing it after its bankruptcy, because that might have caused more people in the Rust Belt to give up hope in the automobile industry and refocus their efforts on other enterprises with more of a future.
The same principal helps explain why some of the countries most successfully transition to Western style economies in the wake of the break up of the Soviet Union like the Czech Republic, are small, while those having a harder time adapting, like Romania and the Ukraine, are big. It also explains why conversion to capitalist economies in East Asia has been led by small "Asian tigers" like Hong Kong, Singapore and Taiwan, rather than by bigger countries. Smaller political economies have less inertia.
No comments:
Post a Comment