Best buy? It's still this area

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  • | 12:00 p.m. September 10, 2002
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Realty/Builder Connection

For a record-setting ninth consecutive quarter, Jacksonville remains as Florida’s most affordable large housing market for the first three months of 2002, according to the National Association of Home Builders’ Housing Opportunity Index.

“Home buyers earning the median income of $55,600 could afford to purchase 77.8 percent of all the newly-built homes sold in the Jacksonville MSA in the first quarter,” said Denise Wallace, president of the 1,600 member Northeast Florida Builders Association. “Low interest rates on home mortgages helped keep homeownership within reach of hundreds of thousands of Americans according to the report just release.”

Also attributing local affordability to the Association’s goal to fight unnecessary fees, unfair taxes and regulations and a favorable sales environment primarily due to the low interest rates, Wallace noted that the national weighted interest rate on adjustable- and fixed-rate mortgages, which is used to calculate the HOI.

“Housing’s strong production and sales, along with its 14 percent contribution to the nation’s Gross Domestic Product, has helped pull the country out of a recession,” said Wallace. “Keep in mind that for every home sold here in Northeast Florida, thousands of dollars in home-related purchases are pumped back into our economy.”

According to the HOI, the average home price in Northeast Florida is $128,000. Jacksonville ranks in the top 70 nationally in affordability at No. 64 and in the top 30 in the south at No. 27. The Jacksonville MSA is composed of Duval, Nassau, St. Johns and Clay Counties.

The far-reaching effects of a strong affordable housing market can be felt in all aspects of the economy.

“Building 100 single-family homes generates 250 jobs in our local economy and $1.4 million in new local taxes and fees in the first year of construction,” said Wallace.

Jacksonville is again trailed by Tampa/St/Petersburg (77.4), Orlando (75.5), Fort Lauderdale (70.3) and Miami (58.1) as the state’s largest metropolitan markets, cities with populations of more than one million, ranked by housing affordability.

The state’s smaller markets reported a top six of Lakeland-Winter Haven (85.5), Tallahassee (85.1), Melbourne Titusville-Palm Bay (84.9), Fort Walton Beach (83.8), Ocala (82.8) and Pensacola (82.8)

The HOI is a measure of the percentage of homes sold that a family earning the median income can afford to buy.

“Nationally, nearly 65 percent of all new and existing homes sold in this country in January through March of 2002 were affordable to families earning the national median income of $54,400,” said Wallace. “That’s up substantially from 56.9 percent in last year’s first quarter, and up a notch from the 64.1 percent of homes affordable at the end of 2001.”

“Clearly, this improvement opened the door to homeownership for thousands more Americans, boosting housing’s contribution to Gross Domestic Product at a crucial time for the nation’s economy,” Wallace noted.

The HOI is a measure of the percentage of new and existing homes sold that a family earning the median income can afford to buy. The latest index, with a reading of 64.8, was based on an analysis of more than 580,000 completed home sales in 191 metro markets nationwide. This was up from a 64.1 reading in last year’s final quarter and from a 56.9 reading in the first quarter of 2001.

The year-over-year comparison is especially relevant because it reflects a significant rise in annual household incomes, which are calculated by the Department of Housing and Urban Development (HUD) annually at the beginning of each year. The national median family income used to compute the HOI throughout 2001 was $52,500. In 2002, the official median U.S. household income is $54,400 - up 3.6 percent from 2001.

Another major factor behind the improved affordability was interest rates. In this year’s first quarter, the average weighted interest rate (on adjustable and fixed-rate mortgages) was 6.86 percent, down substantially from the 7.21 percent average in 2001’s first quarter. Interest rates rose slightly this time as compared to the final quarter of 2001, when they averaged 6.71 percent, but affordability improved anyway, due primarily to higher incomes.

In this year’s first quarter, Elkhart-Goshen, Ind. made its first appearance at the top of the affordability chart since 1995. With an HOI of 94.9, nearly 95 percent of homes sold in Elkhart-Goshen were affordable to families making that area’s median income of $59,300. On the flip side of the coin, Salinas, Calif., was the least affordable metro area with an HOI of 7.7. This means that fewer than 8 percent of homes sold in Salinas during the first quarter were affordable to families earning the area’s median income of $53,800.

San Francisco, which has most often appeared at the bottom of the affordability chart since the HOI was instituted in 1991, improved somewhat in the latest index. A 7.5 percent increase in the area’s median household income was responsible for lifting San Francisco two spots to the third-least-affordable market, with 9.2 percent of homes sold in the first quarter within the grasp of families earning the area’s median income of $86,100.

As usual, the Midwest was the most consistently affordable region for housing, with 18 entries on the “25 Most Affordable Metro Areas” list, while the South had five markets on that list, the Northeast had two and the West had none. Conversely, the West had 20 entries on the “25 Least Affordable Metro Areas” list, while the Northeast had five and the Midwest and South were not represented there.



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