Indianapolis Continues to Lead Nation in Housing Affordability

Looking for a good deal on a house? If you live in Indianapolis, you won't have to look very far.

The home of the nation's most famous auto race has the most affordable housing prices in the United States among major cities, according to the National Association of Home Builders. Nearly 95 percent of all homes in the Indianapolis market could be purchased by a family earning the area's median income of $68,100 without busting their budget.

Indianapolis has now topped the index for four straight years. Other highly affordable metropolitan areas were Youngstown, Ohio; Detroit, Mich.; Dayton, Ohio; and Grand Rapids, Mich., rounding out the top five. For purposes of the study, metropolitan areas commonly include several adjacent communities as well.

The quarterly survey, conducted in cooperation with Wells Fargo Bank, uses a formula of local housing prices, median incomes and mortgage interest rates to gage affordability. The study assumes a 30-year fixed-rate mortgage at 10 percent down, with a family paying 28 percent of its gross monthly income on housing.

Overall, 72.3 percent of new and existing homes sold nationwide in the second quarter of 2009 were deemed to be affordably to families earning the national median income of $64,000, down slightly from the record 72.5 percent set in the previous quarter. The figures reflect the sharp decline in home prices over the past year; in the second quarter of 2008, only 55.0 percent of all homes were deemed affordable by a family earning the U.S. median income.

The least affordable place to purchase a home in the second quarter of the year was White Plains, N.Y., where only 28 percent of residential real estate was considered affordable by a family earning the area's median income of $64,800. Other least-affordable communities included San Francisco, Honolulu, Los Angeles, Glendale, Calif.; and Santa Ana-Anaheim, Calif.

Some of the nation's most affordable housing was to be found in smaller markets, several of which topped Indianapolis in affordability. Kokomo, Ind. led all communities with a 98 percent affordability rate, followed by Lansing-East Lansing, Mich.; Mansfield, Ohio; Elkhart-Goshen, Ind.; Lima, Ohio; and Bay City, Mich., all of which topped 95 percent.

Full listings, in MS-Excel format, are available here on the National Association of Home Builders web site.