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Where the Affordable Homes Are
Those seeking affordable housing in the United States are in luck — for the most part.
Out of 95 affordable markets worldwide, 84 are in the U.S according to the 2014 Demographia International Housing Affordability Study, which ranked 360 worldwide markets on affordability based on the ratio of median income to median house price.
This means that overall odds of finding something inexpensive are higher. However, certain metropolitan markets are seeing dramatic price increases, which tend to be steepest in desirable locations.
According to the National Association of Realtors’ newest quarterly report, the Bay area in California features the two most expensive metropolitan markets: San Jose and San Francisco, respectively.
Myron von Raesfeld, president of the Santa Clara County Association of Realtors in San Jose, says his area tends to attract entrepreneurs and companies, all of which are looking for both residential and commercial real estate. However, the recession hit real estate development in the area particularly hard.
“What happened during that time was that developers stopped building. While the economy in the area, in general, has continued to grow in population size, we’ve had an absence of new development,” von Raesfeld explains. “It is a difficult time for buyers.”
This isn’t true across the country, however. For metropolitan areas, Toledo, Ohio, has the lowest median price for a single-family home: $80,500 in the NAR’s quarterly report. But a low price isn’t the only factor of affordability.
Wendell Cox, co-author of the Demographia survey, explained that the study calculated affordability by measuring the ratio of median household price to median household income. Walter Malony, spokesman for the NAR, says that “interest rates are pretty universal across the country,” making income the primary variable in determining affordability.
So what is the most affordable major metropolitan market? According to Demographia, it’s Pittsburgh, with a median household price of $116,000 and a median household income of $51,400.
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