Les Christie, staff writer, CNNMoney.com

May 21st, 2010

Top 5 Most Affordable Cities

1. (tie): Indianapolis

Median home price: $96,000
Median income: $68,700
Affordability score: 94.9%

America’s most affordable housing market is the 33rd largest metro area in the United States, with 1.7 million people.

The median family income is fairly high — $68,700 — and median home prices are a very reasonable $96,000, according to the National Association of Homebuilders and Wells Fargo Housing Opportunity Index.

Helping keep home prices depressed is a fairly virulent foreclosure plague: There were more than 18,400 properties with foreclosure filings during 2009.

The turmoil in the auto industry, which Indianapolis had been closely associated with, has hurt the city. But increased diversification, which has made pharmaceutical companies, banks government agencies and insurers all important employers, has helped keep job losses in check. The unemployment rate was 9.5% in March, according to the Bureau of Labor Statistics, nearly matching the national rate of 9.7% that month.

2. (tie): Youngstown, Ohio

Median home price: $69,000
Median income: $53,500
Affordability score: 94.9%

Youngstown was a vibrant, wealthy steel city for many decades. Workers there were paid some of the highest factory wages anywhere.

But the mill closings of the late 1970s devastated the area’s economy, and about 40,000 manufacturing jobs have been lost. In March, 14% of workers in the area were idle.

As jobs vanished, the area’s population shrank, leaving lots of vacant homes for sale — from very modest row houses to huge mansions. That helps keep the median home price in the metro area very low — and boosts Youngstown’s affordability score.

Low interest rates also help. Financing 80% of a $69,000 home with a 30-year, fixed rate mortgage at 5% would result in a monthly payment of $296. At those kinds of prices, renters soon become homebuyers.

3. Syracuse, N.Y.

Median home price: $95,000
Median income: $64,300
Affordability score: 94.5%

A newcomer to the list, Syracuse is one of the many Upstate New York cities that grew up along the route of the Erie Canal, which made them wealthy. Syracuse’s importance as a transportation hub continues to this day, with two major interstates crossing here.

Much of the area’s economic base depended on manufacturing, and many of those industries have declined. While the metro area’s population has expanded modestly, the core city has shrunk to fewer than 140,000 from a post-war high of 220,000. That shrinkage means there’s much housing stock, keeping home prices very low.

The economy slowed during the recession and unemployment grew, but the rate — 8.5% during March — is still lower than the national average.

4. Dayton, Ohio

Median home price: $88,000
Median income: $61,700
Affordability score: 94.4%

The hometown of Wilbur and Orville Wright, Dayton still hosts a significant aerospace industry centered on the Wright-Paterson Air Force base

But the decline of heavy industry — including last year’s loss of the headquarters for NCR Corp., the old National Cash Register Co., to Duluth, Ga. — has pushed the city toward the service economy for job growth. That has not stemmed the unemployment tide; the rate stood at 12.3% in March.

The core city’s population has dropped from a peak of more than 260,000 in 1960 to about 150,000 today. The metro area population has also dropped slightly over the past 10 years, according to Census Bureau estimates.

That has lessened demand for homes and helped keep prices low; the median has hovered around $100,000, more or less, the entire decade. At the same time, median income has grown from about $55,000 to more than $62,000. That increase, coupled with very low mortgage rates, made home buying extremely affordable.

5: Grand Rapids, Mich.
Median home price: $102,000
Median income: $62,500
Affordability score: 93.7%

This medium-sized, western Michigan city flourished during the 19th century by turning nearby hardwood forests into furniture. Golden oak cabinets, dining tables and chairs once crafted in the area can now be spotted in many an antique store around the nation. Today, it still is a leading manufacturer of office furniture.

The metro area, like much of the industrial Midwest, has seen better days. Besides furniture, it also had a robust auto manufacturing base, which has declined along with the rest of the industry. Grand Rapids economy is now more diversified with health services an important employer. Still, many people are out of work; the metro area’s 12.8% unemployment rate is more than three percentage points higher than the national average.

The people who are employed make decent wages, over $62,000 for the median household, more than enough to afford a nice house.

There are many hundreds of homes for sale in the metro area for less than $90,000.

Top 5 Least Affordable Cities

1. New York

Median home price: $426,000
Median income: $65,600
Affordability score: 20.9%

Home prices can be staggeringly high in the New York City metro area, but median income is not commensurately high; it’s under $65,000. That combo makes this the country’s least affordable major metro area.

Affordability has improved lately: The median home price has fallen from about $500,000 at the market peak, and more properties are within reach now that mortgage rates are near historic lows.

After holding up better and longer than most housing markets, sales and prices around New York City have started to experience greater declines. The market is highly influenced by what’s happening on Wall Street; when financial markets sneeze, the real estate industry says “God bless you” with feeling.

Financial markets have stabilized a bit lately and investment banks are paying out bonuses. That could hasten a housing market recovery in the metro area.

2. San Francisco

Median home price: $585,000
Median income: $98,400
Affordability score: 23.4%

Home prices in the Bay Area rose during the last three months of 2009, dropping the percentage of affordable homes sold to 23.4.

Still, prices are way off from the heady days of 2006, when a median-priced house sold for $769,000, according to the NAHB-Wells Fargo Housing Opportunity Index. Now the median home is only $585,000.

It’s a good thing the area’s median income comes to a whopping $98,400, among the highest in the nation. Unemployment, however, is growing, and the 11% rate for the metro area puts it well above the national average.

That has contributed to the foreclosures that continue to plague the Bay Area. RealtyTrac figures show a total of more than 54,000 homes with filings in 2009.

3. Honolulu

Median home price: $403,000
Median income: $81,700
Affordability score: 34.7%

The biggest city and metro area in the Aloha State has been an expensive place to live for decades; little developable land and the need to import building materials from far away helped inflate home prices.

Median home prices have bounced around a lot, topping out at around $585,000 during the last three months of 2007 and dropping to $360,000 in the first quarter of 2009. They bounced back to $403,000 in early 2010.

The economy is as heavily dependent on tourism as any American city, and that industry has suffered as more Americans think twice about taking expensive vacations. Hotel occupancy rates declined for 18 consecutive months before starting to rise again last September. They have been up nearly every month since.

The metro area’s official unemployment rate stood at just 5.6% in March, well below the national average.

Foreclosures have been a mild but rapidly increasing problem, with just 3,985 properties having a foreclosure filings during 2009, according to RealtyTrac. That was 128th among 203 metro areas covered. That represented, however, a 671% increase over 2008.

If that trend continues, it could unleash a host of distressed properties on the market, which should bring down prices and raise affordability.

4. Santa Ana, Calif.

Median home price: $410,000
Median income: $87,300
Affordability score: 34.5%

Many of the booming Orange County economies were driven by the once-swelling housing bubble. Thousands of jobs were created in construction, the real estate industry, retail and mortgage lending. Once that bubble burst, a lot of these jobs disappeared.

The Bureau of Labor Statistics counts Santa Ana as part of the Los Angeles metro area for calculating unemployment rate and that, at 11.7% in March, was above the national average. Home prices have dropped substantially from the high they hit back in mid-2006, when the median Santa Ana home sold for $630,000. Prices have plummeted since; in the first three months of 2009, the median price was just $410,000. That caused affordability to improve but still only 34.5% of the homes sold were comfortably open to median-income earners.

5: Los Angeles

Median home price: $306,000
Median income: $62,900
Affordability score: 35.9%

As the post-war City of Angels filled in and up, with the population exploding to nearly 4 million in town and 13 million in the metro area, the area has mostly run out of land to build on. That has led to much higher development costs and home prices.

Still, L.A. values have fallen far from the bubble years, off nearly 40% since mid-2006. Affordability is improved as well, with 35.9% of homes sold falling in a range that median income earners could comfortably pay for.

With prices much lower and unemployment at 11.7%, many area homeowners are having a tough time staying out of foreclosure; there were filings on nearly 176,000 homes last year, the highest total for any metro area.

All those properties coming back on the market has depressed prices that would otherwise be far less affordable than they are now.

Read more about where home prices are most affordable.

Thursday, September 4, 2008

Stacy Williams owns a three-bedroom house with a full basement and central air-conditioning in a quiet neighborhood on the upper west side of Youngstown, Ohio.Williams, now 33, was earning $8.05 an hour as a manager at McDonald’s when she moved into the house with her husband, a laborer at a construction equipment manufacturer, and son back in 2004. The couple’s combined annual salary was $33,000. But the purchase didn’t require much of a financial stretch: The house cost $48,000. “If you have the credit score to do it, there’s nothing that can stop you from buying a home in Youngstown,” said Williams, whose plans for the house include a second bathroom.

A fallout from the real estate slump is that once again many homeowners are forced to look for homes that are within their budget. Access to cheap adjustable-rate mortgages gave many Americans the chance to live in homes that under normal circumstances they could have never afforded. People such as the Williamses are lucky that their income matches up well with the average home prices in Youngstown, but if they had lived somewhere more expensive, they might not have been able to buy their own home or would have spent too much, and now could have been facing the prospect of foreclosure.

So what metro areas are most and least affordable? The Youngstown metro area, which has a median income of $52,000 and a median home price of $77,000, is the second most affordable metro area in the U.S., according to the new National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) for the second quarter. BusinessWeek.com used the index to rank the 10 most affordable and 10 least affordable major metros based on incomes and home prices. Indianapolis was the most affordable—91.6% of homes sold in the second quarter could be afforded by median-income households. The least affordable was the New York City-White Plains (N.Y.)-Wayne (N.J.) metro area, where only 11.4% of homes are affordable to median-income earners. (A decade ago, 66.4% of New York-area homes were affordable).

Affordable Youngstown

Stacy Williams owns a three-bedroom house with a full basement and central air-conditioning in a quiet neighborhood on the upper west side of Youngstown, Ohio.

Williams, now 33, was earning $8.05 an hour as a manager at McDonald’s when she moved into the house with her husband, a laborer at a construction equipment manufacturer, and son back in 2004. The couple’s combined annual salary was $33,000. But the purchase didn’t require much of a financial stretch: The house cost $48,000. “If you have the credit score to do it, there’s nothing that can stop you from buying a home in Youngstown,” said Williams, whose plans for the house include a second bathroom.

A fallout from the real estate slump is that once again many homeowners are forced to look for homes that are within their budget. Access to cheap adjustable-rate mortgages gave many Americans the chance to live in homes that under normal circumstances they could have never afforded. People such as the Williamses are lucky that their income matches up well with the average home prices in Youngstown, but if they had lived somewhere more expensive, they might not have been able to buy their own home or would have spent too much, and now could have been facing the prospect of foreclosure.

So what metro areas are most and least affordable? The Youngstown metro area, which has a median income of $52,000 and a median home price of $77,000, is the second most affordable metro area in the U.S., according to the new National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) for the second quarter. BusinessWeek.com used the index to rank the 10 most affordable and 10 least affordable major metros based on incomes and home prices. Indianapolis was the most affordable—91.6% of homes sold in the second quarter could be afforded by median-income households. The least affordable was the New York City-White Plains (N.Y.)-Wayne (N.J.) metro area, where only 11.4% of homes are affordable to median-income earners. (A decade ago, 66.4% of New York-area homes were affordable).

Buyer’s Blues in New York

Longtime Manhattan renters Olive Hayes, 64, a New York City nurse, and her husband, Kevin, a Verizon employee, were hoping to spend no more than $450,000 when they started looking for a house more than a year ago. Hayes said she wanted a large apartment with a terrace and a separate living room and dining room. They wanted to buy, in part, because Hayes plans to retire and they will have to give up the spacious two-bedroom apartment they rent from the hospital. It’s located in a doorman building overlooking the East River on 96th Street and First Avenue.

On Aug. 25, the Hayeses closed on a one-bedroom pad in a newly built condo building eight blocks north of their current home. It doesn’t have a terrace and is about 764 square feet, much smaller than what Olive Hayes had originally hoped for. It’s going to be a tight fit for her plants and piano. “It’s not easy. It would probably be $1.5 million for what I’m used to,” she said.

Hayes’ agent, Lynda D. Gray of Bellmarc Realty, said first-time buyers in New York often have to lower their expectations and stretch their finances. “The motivator is the investment,” she said. “You’re not going to have as much space as you like…but you’re going to be able to sell for a profit and possibly buy something outside of the city.”

The 10 Most Affordable Housing Markets

1. Indianapolis-Carmel, Ind.
Median home price: $108,000
Median household income: $65,100
Share of homes affordable to median-income families: 91.6%
Share of affordable homes in Q2 1998: 73.1%

2. Youngstown-Warren-Boardman, Ohio-Pa.
Median home price: $77,000
Median household income: $52,000
Share of homes affordable to median-income families: 90.1% 
Share of affordable homes in Q2 1998: 80.1%

Wikimedia.org/Andrew Balet

Detroit-Livonia-Dearborn

3. Detroit-Livonia-Dearborn, Mich.
Median home price: $92,000
Median household income: $54,400 
Share of homes affordable to median-income families: 88.4%
Share of affordable homes in Q2 1998: 62.8%

4. Warren-Troy-Farmington Hills, Mich.
Median home price: $140,000
Median household income: $78,800 
Share of homes affordable to median-income families: 86.8%
Share of affordable homes in Q2 1998: N/A

5. Grand Rapids-Wyoming, Mich.
Median home price: $112,000 
Median household income: $59,200
Share of homes affordable to median-income families: 86.3% 
Share of affordable homes in Q2 1998: 74.8%

Wikimedia.org/Joel Rossol

Toledo

6. Toledo, Ohio

Median home price: $104,000
Median household income: $60,100 
Share of homes affordable to median-income families: 85.5%
Share of affordable homes in Q2 1998: 77.3%

7. Dayton, Ohio
Median home price: $102,000 
Median household income: $59,800 
Share of homes affordable to median-income families: 85.4% 
Share of affordable homes in Q2 1998: 83.8%

8. Akron, Ohio
Median home price: $100,000 
Median household income: $61,700 
Share of homes affordable to median-income families: 84.5%
Share of affordable homes in Q2 1998: 69.6%

Syracuse

9. Syracuse, N.Y.

Median home price: $98,000
Median household income: $61,000 
Share of homes affordable to median-income families: 84.2%
Share of affordable homes in Q2 1998: 83.6%

10. Scranton/Wilkes-Barre, Pa.
Median home price: $91,000 
Median household income: $54,700 
Share of homes affordable to median-income families: 82.5%
Share of affordable homes in Q2 1998: N/A

View the 10 least affordable housing markets.

Indianapolis, AKA Circle City or Nap-town is the capital of Indiana. The Indianapolis metropolitan area has seen modest and steady growth among U.S. cities, with growth centered in the surrounding counties of Hamilton, Hendricks, and Johnson. Hamilton and Hendricks Counties are currently the fastest growing counties in Indiana and in the Midwest, although the state as a whole is only showing modest growth. Currently, the Combined Statistical Area stands at 1,984,644, making it the 23rd largest CSA in the U.S. The locals like to refer to themselves as “Hoosiers” which loosely translates to “A person from Indiana who likes basketball.” Central Indiana residents enjoy a low cost of living as the housing market is the second most affordable (among major metropolitan areas) in the United States.

Indianapolis Attractions:
Indianapolis Zoo
Indianapolis Motor Speedway
Indianapolis Museum of Art
The Children’s Museum
Eiteljorg Museum
Indiana State Museum
Brown County
Conner Prairie
Eagle Creek Park
Arts Council of Indianapolis
Gregory Hancock Dance Theatre
Herron School of Art and Gallery
Indianapolis Arts Center
Indianapolis Children’s Choir
Indianapolis Civic Theatre
Indianapolis Opera
Indianapolis Symphony Orchestra
Indiana Historical Society
Indiana Repertory Theatre
Murat Centre
National Art Museum of Sport
White River Gardens

Education
Listing of All Indianapolis Public Schools

Maps
Crime View Community
Indiana Historical Map
Indiana Time Zones
Indiana Sheriffs’ Sex Offender Registry
Indy Site Finder
Interactive County Maps

Sports
Indianapolis Colts
Indiana Pacers
Indianapolis Ice
Indianapolis Indians

Local Organizations
Indianapolis Chamber of Commerce
Marion County Public Library
Indiana University

State Government
State of Indiana
Arts Commission
Attorney General
Department of Agriculture
Department of Commerce
Department of Natural Resources
Department of Revenue
Tax Forms
Department of Transportation
Office of The Governor
State Archives
State Library
State Parks
State Treasurer
Indiana Bureau of Motor Vehicles
Indianapolis International Airport