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Housing is Most Unaffordable in West, Northeast Regions

Market Data + Trends

Housing is Most Unaffordable in West, Northeast Regions

January 12, 2021
San Francisco homes
Photo: Alexander Demyanenko

The National Association of Realtors’ housing affordability index increased 1.2 month-over-month in November, yet affordability remains lower compared to 2019. The median family income advanced 1.7% from November to October as well, helping to relieve families, yet the modest increase is not enough to combat rising home prices. Out of all four regions, the Midwest emerged as the most affordable for households making the median income while the West remained the most unaffordable. Households need to make a median family income of $38,256 in the Midwest to afford a median-priced home, whereas the qualifying family income needed in the West is $75,312.

The income required to afford a mortgage, or the qualifying income, is the income needed so that mortgage payments account for 25% of family income.2 The most affordable region was the Midwest, with an index value of 216.4 (median family income of $82,783 which is more than twice the qualifying income of $38,256). The least affordable region remained the West, where the index was 119.7 (median family income of $90,115 and the qualifying income of $75,312).  The South was the second most affordable region with an index of 175.2 (median family income of $76,694 and the qualifying income of $43,776) The Northeast was the second-most unaffordable region with an index of 166.8 (median family income of $95,028 with a qualifying income of $56,976).

Housing affordability3 declined from a year ago in all regions except the West, where there was a gain of 3.3%. The Midwest had a modest decline of 0.6% followed by the South with a dip of 0.8%. The Northeast region had the biggest decrease in affordability at 4.2%.

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