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One in Five Housing Markets Less Affordable than Their Historical Averages

bubbleMore than one in five U.S. housing markets had surpassed their local historical home affordability average as of October, according to a report released Thursday by property information firm RealtyTrac.

Out of 475 U.S. counties analyzed in the company's latest real estate report, 98—21 percent—had a higher affordability percentage than their historical average. (Affordability percentage is defined by RealtyTrac as the percent of median income needed to make monthly payments on a median-priced home with a 10 percent down payment.)

The group includes a number of markets where supply and demand conditions have sent prices skyrocketing—including California's Los Angeles, Alameda, and Orange counties—and other areas where local economic conditions have boosted the housing market, such as Texas' Harris, Dallas, and Travis counties.

"While 99 percent of markets have not returned to the irrational affordability levels during the previous housing bubble, one in five markets have now exceeded their historical affordability norms, which is a strong sign that either a new home price bubble is forming in those markets or that home price appreciation will soon plateau until incomes can catch up," said Daren Blomquist, VP at RealtyTrac.

In addition, 58 counties—12 percent of all markets analyzed—posted a median price higher than their bubble-era peaks as values continue to rise. However, with interest rates still low and incomes slowly coming up, only six counties are currently considered less affordable now for median income earners than they were before the crash, according to RealtyTrac:

  • Suffolk County, Massachusetts (Boston)
  • Travis County, Texas (Austin)
  • Jefferson County, Alabama (Birmingham)
  • Brazos County, Texas (College Station)
  • Allegan County, Michigan
  • Montgomery County, Tennessee (Clarksville)

Across all counties, buying a median-priced home in October required 26 percent of median income on average, down from an average 41 percent in each county's peak month during the bubble.

About Author: Tory Barringer

Tory Barringer began his journalism career in early 2011, working as a writer for the University of Texas at Arlington's student newspaper before joining the DS News team in 2012. In addition to contributing to DSNews.com, he is also the online editor for DS News' sister publication, MReport, which focuses on mortgage banking news.
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