Home prices in major U.S. metropolitan areas shot up in the second quarter, possibly signaling a new trend, according to a report by HSH.com, a mortgage tracking service.
This meant that homebuyers needed a higher salary than in the first quarter to be able to afford a median-priced home in their area.
The price increases were notable in that only six metro areas of the 27 HSH.com analyzed had experienced home price rises of more than 1% in the first quarter.
Median home prices increased quarter over quarter in 25 of the 27 metro areas studied, and substantially in some areas including by 24% in Cleveland, by 18% in Chicago and by 17% in both Cincinnati and Pittsburgh.
At the same time, mortgage rates dropped in every metro area.
The study found that buyers in only three metro areas needed a smaller salary in the second quarter than in the first to afford a median-priced home. The South and the Rust Belt dominated in the ranking of the most affordable markets.
In its analysis, HSH.com used second-quarter NAR data for median-home prices and its own second quarter average interest rate for 30-year fixed-rate mortgages to calculate how much salary would be required to afford principal, interest, taxes and insurance in 27 metro areas.
It used standard 28% front-end debt ratios and a 20% down payment subtracted from the NAR's median-home-price data to arrive at its figures. It factored in available information on property taxes and homeowner's insurance costs to better reflect the income needed in a given market.
Following are the 10 most affordable metro areas for homebuyers in the second quarter, with changes from the previous quarter noted in parentheses.
10. Orlando, Florida
Salary needed: $49,382.26 (-$460.94)
Median home price: $223,000 (0.9%)
30-year fixed mortgage rate: 3.76% (-0.18%)
Monthly payment: $1,152.25
9. San Antonio
Salary needed: $48,752.98 ($1,759.96)
Median home price: $210,500 (7.67%)
30-year fixed mortgage rate: 3.71% (-0.16%)
Monthly payment: $$1,137.57
8. Tampa, Florida
Salary needed: $44,874.70 (-$704.99)
Median home price: $199,900 (-0.35%)
30-year fixed mortgage rate: 3.86% (-0.15%)
Monthly payment: $1,047.08
7. Phoenix
Salary needed: $44,715.99 ($1,049.08)
Median home price: $234,700 (5.2%)
30-year fixed mortgage rate: 3.71% (-0.18%)
Monthly payment: $1,043.37
6. Atlanta
Salary needed: $40,092.12 ($3,267.15)
