Post by jeffolie on Jul 23, 2007 15:38:40 GMT -6
Least Affordable U.S. Real Estate Markets
Forget coffee when it's time to sober up. Instead, check out the real estate listings in New York or Los Angeles.
There, buyers pay $1 million for a property that might fetch half that elsewhere. The disparity illustrates how affordability has been spiraling out of control in places on the East and West coasts.
For example, in the first quarter of 2001, 42.3% of homes sold in Los Angeles were available to the median earning household. But in the first quarter of 2007, only 3% of homes sold there were affordable to those households earning the median income. This is based on data from the National Association of Home Builders (NAHB) and Wells Fargo (nyse: WFC - news - people ) that assumes a 10% down payment, a 6.1% mortgage, and tax and insurance costs calculated by the Federal Housing Finance Board.
Given those numbers, it's no surprise that Los Angeles tops our list of the nation's least affordable real estate markets. We determined our ranking by combining the NAHB/Wells-Fargo index with our rating of home price to earnings, which measures how many years of gross income it would take to buy a home at the median sales price. The lower the number, the more affordable a house is for the median home buyer.
Rounding out the top ten least affordable markets are San Diego, Calif.; New York, Miami, Fla.; Sacramento, Calif.; Las Vegas, Nev.; Seattle, Wash.; Boston and Orlando
www.forbes.com/2007/07/20/unaffordable-housing-property-forbeslife-cx_mw_0723realestate.html?partner=daily_newsletter
Forget coffee when it's time to sober up. Instead, check out the real estate listings in New York or Los Angeles.
There, buyers pay $1 million for a property that might fetch half that elsewhere. The disparity illustrates how affordability has been spiraling out of control in places on the East and West coasts.
For example, in the first quarter of 2001, 42.3% of homes sold in Los Angeles were available to the median earning household. But in the first quarter of 2007, only 3% of homes sold there were affordable to those households earning the median income. This is based on data from the National Association of Home Builders (NAHB) and Wells Fargo (nyse: WFC - news - people ) that assumes a 10% down payment, a 6.1% mortgage, and tax and insurance costs calculated by the Federal Housing Finance Board.
Given those numbers, it's no surprise that Los Angeles tops our list of the nation's least affordable real estate markets. We determined our ranking by combining the NAHB/Wells-Fargo index with our rating of home price to earnings, which measures how many years of gross income it would take to buy a home at the median sales price. The lower the number, the more affordable a house is for the median home buyer.
Rounding out the top ten least affordable markets are San Diego, Calif.; New York, Miami, Fla.; Sacramento, Calif.; Las Vegas, Nev.; Seattle, Wash.; Boston and Orlando
www.forbes.com/2007/07/20/unaffordable-housing-property-forbeslife-cx_mw_0723realestate.html?partner=daily_newsletter