According to a recent study, for middle-income families, purchasing middle-priced homes is affordable in only 8 out of the country’s 25 biggest metropolitan areas.
Here are the top 5 cities where buying a home is not
an affordable option anymore for most people:
Baltimore
This city has
become 16% more unaffordable than the previous year. Buyers prefer Baltimore
because of its proximity to Washington D.C. Last year there was a fall in the
median sales price of homes in the metro area which led to a surge in demand
and a spike in prices. Buyers were planning to stay put in homes long term and
didn’t mind paying extra. In many cases, buyers were willing to up their offers
if sellers received better offers.
Phoenix
The affordability
of homes here has come down as compared to last year. The housing meltdown is warming
up again. In Phoenix, many buyers are investors intending to rent out homes.
This is bringing down inventories and increasing prices. Institutional
investors such as private equity firms and hedge funds are causing prices to
increase by purchasing many properties and refusing to resell them.
This trend has led
to an increase in values of existing homes. Homeowners are waiting for their
home values to go up further before deciding whether or not to sell their homes.
Los Angeles
Homes in L.A. are
17% less affordable as compared to last year. In the county area, the median
sales price this year has been considerably higher than last year. This is because
investors have been making a large number of purchases and many young adults
have entered the region due to a growing tech industry. Bidding wars among
buyers have almost become the norm. Some buyers are removing offer contingencies
in an attempt to get past other offers.
Sacramento
Homes here are 19%
less affordable against last year’s figures. Sacramento is witnessing rising
prices due to a spillover effect. With prices in the bay area of San Francisco
continually rising, many buyers are unable to afford real estate there.
Instead, they’re looking east towards the Central Valley which is more
affordable. There’s been a significant spike in luxury real estate prices
during the third quarter in the Sacramento metro area as a result of increased
demand and reduced inventory.
In the first part
of this year, almost all homes in the market were sold within a week. In a
healthy market, there’s usually about six months inventory for sale. Sacramento
saw listings of just under a month which pushed prices upwards.
Detroit
Detroit has
become 28% percent more unaffordable than last year. Though Detroit had
a bankruptcy filing in July, real estate prices have picked up and are getting out
of reach for many buyers. July saw a spike of 17% in home prices in the Detroit
metro area as compared to this month a year ago.
Most of the price
increase can be attributed to many car manufacturers getting back into
business. This has helped in boosting consumer confidence and more buyers are entering
the market. Many other large companies have also moved their offices out of the
suburbs into downtown Detroit. This has boosted real estate demand and brought
down supply.
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