Housing Affordability in 2014

by Randall O’Toole, The Anti-Planner, September 20, 2016

For the United States as a whole, the value of a median-priced owner-occupied home increased from 2.7 times median family incomes in 2013 to 2.8 times in 2014. The 2014 numbers are from the 2015 American Community Survey, which estimates both home values and family incomes for the year before the survey. In the survey, median family incomes are found in table B19101 while median home values are in table B25077.

You can download my spreadsheets combining data from these two tables from the 2015 survey (which, remember, are for 2014) for the nation, states, and counties, urbanized areas, and cities and other places. For comparison, data for 2013 (from the 2014 survey) can be downloaded for nation, states, and counties, urbanized areas, and cities and other places.

In places where land for new housing is abundant, value-to-income ratios tend to hover around 2. Value-to-income ratios above 3 suggest real or artificial limits on the ability of homebuilders to meet the demand for new housing. While the national ratio of 2.8 is worrisome, many states are well under this ratio.

The ratio in Texas, for example, is 2.3 (up from 2.2 in 2013) despite the fact that Texas is one of the fastest-growing state in the nation. The most affordable states, Iowa, Kansas, and Nebraska, have ratios of 2.0. At the other end of the scale, Hawaii is the least affordable, at 6.8 (up from 6.7 in 2013), while California’s is 6.1 (up from 5.8).

The five least-affordable urbanized areas are in California, and the 24 least-affordable are all in California or Hawaii. Santa Barbara has the dubious distinction of being number one, at 9.3 (actually down from 9.6 in 2013). New York is the 25th least-affordable at 5.3 (up from 5.1), while Bend, Oregon climbed from number 49 at 4.0 in 2013 to number 27 at 5.0 in 2014.

Many of the most affordable urbanized areas are in the Rust Belt, including Scranton, PA, Youngstown, OH, and Flint, MI. But some fast-growing regions in Texas remain very affordable, with Beaumont, Odessa, and Wichita Falls all having ratios below 2.0. Houston’s ratio has grown from 2.2 to 2.4, while Dallas-Ft. Worth has grown from 2.3 to 2.4.

Among cities, Palo Alto and Santa Barbara compete for the top spot, with value-to-income ratios above 12. The estimated median home price in Palo Alto is listed as “$2,000,000+,” so the exact ratio can’t be calculated, but even at $2 million, the ratio is well over 11. New York City, Miami, Honolulu, and Passaic and Union City New Jersey are the only cities outside of California in the top 25, and Boston is the only city outside of California in the next 25.

For information on how to download your own data, see yesterday’s post. It’s unfortunate that data from the 2015 survey are two years old when they have finally been published. It is possible to estimate value-to-income ratios using more recent information–Zillow estimates median home values and the Department of Housing and Urban Development estimates median family incomes–but these other sources aren’t as reliable.

Zillow’s numbers, for example, are based on recent home sales, and recent sales may not be an accurate cross-section of the owner-occupied homes in the area. Thanks to the American Community Survey, however, we at least have pretty accurate trend data going back to 2005, plus data from the decennial censuses going back to 1960.

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