National Housing Market Outlook

Local Affordability Issues Might Surprise You

Dean Wehrli

Dean Wehrli

August 10, 2019

We all know that New York is more expensive than Texas and that relocating home buyers can get more for their money in the South. However, for local housing industry executives, what matters is how expensive each market is in comparison to its own history. Our Burns Affordability Index™ (a 10-point scale where 0 is the most affordable time in a market’s history and 10 is the least affordable time) measures the ratio of total housing costs (mortgage payment, property taxe etc.) to incomes over time in each market. By this measure, Houston and Denver appear more out of line than other markets.

Of course, affordability is a draw to Houston and Denver if you are coming from very expensive markets like California, but the value gap between California and these markets has narrowed recently. Only time will tell if this gap has narrowed permanently.

Our consumer research shows that home buyers are:

  • Moving to more affordable markets

  • Doubling up

  • Renting

  • Waiting
 

Our client research shows that builders are:

  • Building smaller homes

  • Very focused on price points below the FHA loan limit, where financing is most widely available to credit-challenged borrowers

  • Looking to tertiary submarkets where traditional single-family homes can be built at more affordable price points

  • Considering building homes for rent

  • Targeting older move-down buyers who have a lot of equity in their home

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About The Author

Dean Wehrli
Dean Wehrli
Principal
Dean helps housing sector clients figure out not just what might work and what might not, but why.

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