PARALLEL UNIVERSE: Indianapolis: Affordable Housing; L.A.: Anything But! Median Income Higher in Indy than in L.A.
By David M. Kinchen
Editor, Huntington News Network
Hinton, WV (HNN) – Bringing to sharp relief the craziness of the housing
market in the U.S., a new survey shows that Indianapolis, IN maintained its
standing at the most affordable major housing market in the nation, while
the Los Angeles-Long Beach-Glendale, CA area retained the dubious crown of
the least affordable metro area for the SEVENTH straight quarter.
RISMEDIA released the survey Aug. 24. It’s called the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) and it covers Q2 of 2006.
“Today’s HOI reading indicates that 40.6 percent of new and existing homes that were sold during the second quarter were affordable to families earning the national median income of $59,600,” said NAHB President David Pressly, a home builder from Statesville, N.C. “This is just below the 41.3 percent of homes that were affordable to median-income earners in the first quarter and tied to the somewhat higher mortgage rates that prevailed in the April – June period.”
According to the survey: “In the nation’s most affordable major housing market of Indianapolis, 87.4 percent of homes sold in the second quarter were affordable to families earning the area’s median household income of $65,100. The median sales price of all homes sold in Indianapolis during that time was $120,000, which is up from $113,000 in the previous quarter and equivalent to the median sales price for Indianapolis homes sold in the final quarter of 2005.”
What about L.A. (I noticed fast-growing Glendale, northeast of L.A. has been
added to the traditional Los Angeles-Long Beach designation), where $120,000
won’t even buy you a garage: “There, just under 2 percent of new and
existing homes sold during the second quarter were affordable to those
earning the area’s median family income of $56,200. The median sales price
of all homes sold in the area during the period was $521,000.
Aside from the astonishingly high housing prices in L.A. – something I knew first hand from covering real estate at the L.A. Times from 1976 to 1990 – a number jumped out at me: The median family income in Indy -- $65,000 – is almost $10,000 a year more than the L.A. median of $56,200. The survey doesn’t mention the reason, but I’m willing to bet it’s a factor of the large number of immigrants in the L.A. area, many of them illegals from Mexico and Central America. Illegals tend to drive the median income figures way down. I doubt that Indianapolis has that many illegals from South of the Border – yet.
Meanwhile, nationwide housing affordability edged slightly downward as the median price of all homes sold in the period remained unchanged and a slight up-tick was registered in the average mortgage rate, Pressly, the North Carolina builder said.
“Today’s HOI reading indicates that 40.6 percent of new and existing homes that were sold during the second quarter were affordable to families earning the national median income of $59,600,” said Pressly. “This is just below the 41.3 percent of homes that were affordable to median-income earners in the first quarter and tied to the somewhat higher mortgage rates that prevailed in the April – June period.”
Not surprisingly, most of the nation’s most affordable housing is where people don’t want to live, thanks to departing jobs and problems in the auto industry. This undoubtedly accounts for the inclusion “near the top of the list for affordable major metros” of Detroit-Livonia-Dearborn, Michigan; Grand Rapids-Wyoming, Michigan; Buffalo-Niagara Falls, New York; and Youngstown-Warren-Boardman, Ohio-Pennsylvania – in that order.”
The survey: ”Five smaller metro markets outranked all others in terms of housing affordability during the second quarter, including Springfield, Ohio, as well as four Michigan locations: Bay City, Lansing-East Lansing, Saginaw-Saginaw Township North, and Battle Creek, respectively.” All of these metros are in the so-called “Rust Belt” of my native Midwest.
Indianapolis (city population about 780,000; Metro, about 1.6 million) has become a major financial and distribution center, and is thriving like few other heartland cities. It’s the home of Eli Lilly, one of the world’s biggest pharmaceutical firms. My first newspaper job was in the Hoosier state, in Hammond, and my second was in Bloomington, about 50 miles south of Indy. All in all, Indiana is doing better than most of its neighbors.
It’s no surprise to me that the most unaffordable housing in the nation is on either the West Coast or the New York-New Jersey area of the East Coast: “Other major metros at the bottom of the housing affordability chart included Santa Ana-Anaheim-Irvine, California; San Diego-Carlsbad-San Marcos, California; New York-White Plains-Wayne, New York-New Jersey; and Stockton, California, in that order,” the HOI survey disclosed.
Nor is this surprising to a veteran of the California real estate scene: “Among metro areas smaller than 500,000 people, every entry at the bottom of the affordability chart was located in California, starting with Salinas as the least affordable and followed by Merced, Modesto, Santa Cruz-Watsonville and Santa Barbara-Santa Maria, California, respectively.”
Editor’s Note: David M. Kinchen has been a member of the National Association of Real Estate Editors since 1971 and was president in 1984.