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FYI Guy

Seattle Times news librarian Gene Balk crunches the numbers

October 11, 2013 at 3:05 PM

Can the middle class still afford to buy a home in Seattle?

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Multiple offers, bidding wars, waived inspections–this is the reality for many house hunters in Seattle’s hot real-estate market.

With the King County median home price now at $420,000–a 12 percent jump in the past year–the American dream of home ownership may seem increasingly out of reach for middle-class folks in the Seattle area.

But it could be worse.

A new study by real-estate information company Trulia reveals that, contrary to what you might think, Seattle falls outside the 20 most unaffordable markets for middle-class homebuyers.

In order to determine which markets are most and least affordable for average earners, Trulia looked at the relationship between home prices and the median household income in 100 metropolitan areas.

In our area, high home prices are offset, to some degree, by our above-average salaries.  In the Seattle metro, a household earning the median income of $68,500 should be able to afford 55 percent of the homes currently for sale, according to the study.*  That ranked Seattle as the 23rd most unaffordable market in the U.S.

Compare Seattle with San Francisco, where only 14 percent of homes are within reach of someone making the median income.  Home prices there are so exorbitant, it hardly matters that San Franciscans are among the highest earners in the nation.

Orange County, Los Angeles and New York, in order, are the next most challenging areas for middle-class homebuyers.

Folks in Ohio have it a lot easier. The three most affordable places for an average earner are all in the Buckeye State, with Akron leading the way. In Akron, a household earning the median income of $50,000 has its pick of 86 percent of the homes currently for sale.

The Tacoma area placed 55th on Trulia’s rankings, with 68 percent of homes within reach of middle-income earners.

Here is the complete list of the top-25 most unaffordable metro areas:
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Rank U.S. Metro % of homes for sale within reach of middle class, 2013 Maximum affordable home price, rounded (Trulia)
1 San Francisco, CA 14% $409000
2 Orange County, CA 23% $373000
3 Los Angeles, CA 24% $271000
4 New York, NY-NJ 25% $274000
5 San Diego, CA 28% $309000
6 San Jose, CA 31% $462000
7 Ventura County, CA 32% $366000
8 Fairfield County, CT 36% $364000
9 Honolulu, HI 40% $395000
10 Boston, MA 41% $322000
11 Oakland, CA 42% $361000
12 Peabody, MA 43% $328000
13 Riverside-San Bernardino, CA 49% $253000
14 Austin, TX 50% $251000
15 Middlesex County, MA 51% $396000
16 Sacramento, CA 51% $284000
17 Miami, FL 51% $196000
18 Providence, RI-MA 52% $255000
19 Fresno, CA 52% $211000
20 Newark, NJ-PA 52% $294000
21 Dallas, TX 53% $240000
22 Long Island, NY 54% $382000
23 Seattle, WA 55% $338000
24 Denver, CO 55% $317000
25 Houston, TX 56% $231000

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*For Trulia’s analysis, a house was considered affordable if the total monthly payment (including insurance and property tax) did not exceed 31 percent of the median household income; in calculating the monthly payment, Trulia assumed that the buyer had a 20 percent down payment and a 30-year fixed mortgage at a 4.5 percent rate.  By Trulia’s calculations, an affordable home in the Seattle-Bellevue-Everett metro would be $338,000 or less.

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