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Despite rising property values this year, housing still affordable

11.30.2012

Rising personal incomes could make homeownership more affordable for some consumers.

Property values declined more than 30 percent in some areas following the housing market collapse, which has contributed to rising levels of affordability for consumers.

So far this year, the price of a four-bedroom, two-bathroom property averaged $282,152, according to a report from Coldwell Banker. Although this may be out of the price range for some prospective buyers, roughly 36 percent of homes currently on the market have price tags of less than $200,000.

California is home to not only the most expensive individual housing market, but also greatest number, the report said. The most expensive marketplace in the country is Los Altos - better known as Silicon Valley. Due to a major presence of technology companies, this year, the average price of homes in the area hit $1.7 million.

Although the Golden State had the greatest number of individual markets, Hawaii was the overall most expensive state for homebuyers, the report said. The statewide price of a four-bedroom, two-bathroom property averaged $742,551.

Some markets much more affordable than others    
In contrast, the most affordable housing market this year was Redford, Michigan, with home prices averaging less than $62,000, according to the report.

"Where Michigan was one of the first states impacted by the recession, it's also been one of the first states to recover," said Kelly Sweeney, chief executive officer of Coldwell Banker Weir Manuel. "As for Redford, with its proximity to metro Detroit and Ann Arbor, the town proves that you don't have to give up amenities to live in an affordable community. Nobody ever gets priced out of Redford, putting the American Dream within grasp of nearly everybody."

Meanwhile, the most affordable state was Arkansas with an average home price of $186,767.

Personal income a major factor
Although weak home prices are a major factor contributing to the level of affordability being felt throughout the country, rising personal incomes has also contributed.

last month, nationwide personal incomes increased by $400 million, according to a report from the Department of Commerce. As a greater number of prospective borrowers come across additional funds to make major investments, such as purchasing property, the home sales transaction could increase significantly in the near future.  

Consumers considering such as move should ensure their finances are in the best possible shape before shopping around for a mortgage. Ordering copies of credit reports could give prospective borrowers a good idea of their credit standing and indicate if they need to make any changes to their financial habits to improve their situations.

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