2009's Most and Least Affordable U.S. Housing

By Prashant Gopal

When we ran the 2008 version of the Most and Least Affordable Housing Markets in the U.S., the housing downturn was already well under way but the economy had yet to be rocked by the financial meltdown brought on by the collapse of Lehman Brothers. Since then housing continued to decline as foreclosures rose and unemployment deepened. Not surprisingly, the industrial heartland of America, much of it largely dependent on the struggling automotive sector, has been hardest hit. That explains why states such as Indiana, Michigan, and Ohio are home to the nation's most affordable housing markets. The winner? Kokomo, Ind. The nation's least affordable? No surprise there: the area around New York City.

Editor's Note: The metropolitan statistical areas (click here to learn more about MSAs) included in this story were ranked based on the share of homes sold in the second quarter of this year that would have been affordable to a family earning the local median income. Affordability is calculated by comparing the median household income to housing costs, assuming that a family can afford to spend 28% of its gross income on housing. The housing costs were calculated using new and existing sales records supplied by First American Real Estate Solutions and include principal, interest, estimated property taxes, and insurance. It's based on a 30-year fixed-rate mortgage for 90% of the sales price. The interest rate is a weighted average of fixed and adjustable rates during the quarter as reported by the Federal Housing Finance Board. The median household income estimates are published by the Housing & Urban Development Dept.

Source: National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index