US home prices are at or near record highs, making them less affordable compared to income and mortgage rates than they were during the peak of the 2006 housing bubble.
Buyers have been on the sidelines, waiting for home prices to fall. Sellers won’t sell because most of them locked in the lowest mortgage rates in a generation before the Federal Reserve unleashed the most aggressive rate hiking cycle in four decades.
With the housing market ‘struck,’ demand has been reduced because of high mortgage rates, and supply is at the most severe levels since the underbuilding woes more than a decade ago, relative to population growth.
With that being said, Goldman’s Susan Maklari published a note to clients on Tuesday that included a chart pack of the US housing industry. Combing through the report, Maklari focused attention on the issue of affordability.
Here’s what she found:
In the charts below, we highlight the four most and least affordable housing markets according to the National Association of Home Builders’s Housing Opportunity Index (NAHB HOI), within the top 25 MSAs by 2022 closings.
In 3Q23, Indianapolis, Minneapolis, Chicago, and Washington DC ranked highest with 75%, 59%, 49%, and 43% of homes affordable relative to median income, respectively.
The lowest-ranked MSAs were led by Los Angeles, Miami, New York, and Riverside, with 3%, 11%, 12%, and 13% of homes affordable for the median income, respectively.
The bad news for prospective buyers is that the most affordable housing markets are located in crime-ridden metro areas run by Democrats who refuse to enforce ‘common sense’ law and order. Even some of the least affordable areas are run by radical progressives, too.