Lower interest rates and home prices contributed to a solid boost in housing affordability in the many parts of the U.S. in the first quarter of 2015, but not here in the Bay Area or other metropolitan areas of California.
Still, the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) reported that consumers everywhere benefited from continued low mortgage rates in the first quarter.
"These conditions offer a great time to buy," said NAHB Chairman Tom Woods, a home builder from Blue Springs, Mo.
"The past two quarters have seen an improvement in affordability as mortgage rates remain low," said NAHB Chief Economist David Crowe.
Major California cities continued to top the list of the least affordable sites, led San Jose-Sunnyvale-Santa Clara, Los Angeles-Long Beach-Glendale and Santa Ana-Anaheim-Irvine. Metropolitan New York City also was among the least affordable.
For a 10th consecutive quarter, San Francisco-San Mateo-Redwood City, Calif. was the nation's least affordable major housing market. Here, just 14.1% of homes sold in the first quarter were affordable to families earning the area's median income of $103,400.
All five least affordable small housing markets were in California. At the very bottom was Santa Cruz-Watsonville, where 21.6% percent of all new and existing homes sold were affordable to families earning the area's median income of $87,000. Other small markets included Salinas, Napa, San Luis Obispo-Paso Robles, and Santa Barbara-Santa Maria-Goleta; in descending order.
Crowe said that in the rest of the country, 85% of the metropolitan areas saw an increase in affordability.
"Along with favorable home prices and pent-up demand, this broad improvement should help encourage more buyers to enter the marketplace," he said.
In all, 66.5% of new and existing homes sold between the beginning of January and end of March outside of California were affordable to families earning the U.S. median income of $65,800. This is up from the 62.8% of homes sold that were affordable to median-income earners in the fourth quarter.
Unlike in California where home prices continue to rise, the national median home price declined from $215,000 in the fourth quarter to $210,000 in the first quarter. Meanwhile, average mortgage interest fell from 4.29% to 4.03% in the same period.
For the second straight quarter, Syracuse, N.Y. remained the nation's most affordable major housing market, as 95.6% of all new and existing homes sold in the first quarter of 2015 were affordable to families earning the area's median income of $68,500.
Also ranking among the most affordable major housing markets in respective order were Toledo, Ohio; St. Louis; Akron, Ohio; and Harrisburg-Carlisle, Pa.
Meanwhile, Sandusky, Ohio topped the affordability chart among smaller markets in the first quarter of 2015. There, 96.3% of homes sold during the first quarter were affordable to families earning the area's median income of $69,600. Other smaller housing markets at the top of the index included Cumberland, Md.-W.Va.; Elmira, N.Y.; Davenport-Moline-Rock Island, Iowa-Ill.; and Kokomo, Ind.