MReport October 2019

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TH E M R EP O RT | 57 O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA The King of Affordability Here is where homebuyers are getting more bang for their bucks. A family in Detroit, Michigan, can afford an average-priced home by earning just $26,690 annually, making it the most affordable metro in the na- tion, according to a new report from Redfin. Also included on the report's list of most-afford- able metros were New York markets Buffalo and Rochester; Dayton, Ohio; and Pittsburgh. Prospective homebuyers in Buffalo needed to earn $31,785 to afford a median-priced home in that market, Rochester homebuy- ers needed an annual salary of $30,289, and Dayton required an annual income of just $28,980. A salary of $33,655 is needed to purchase an average-priced home in Pittsburgh. On the other side of the spec- trum, California was home to seven of the top-10 least-affordable metros in the nation: San Francisco, Anaheim, San Jose, Los Angeles, San Diego, Oakland, and Oxnard. San Francisco had both the highest-necessary income and the highest median-sales price of the 88 markets surveyed. Prospective homebuyers in the Bay Area would need to earn $265,499 an- nually to afford the average-priced home of $1.42 million. "People who live in places like Detroit, Pittsburgh, and Cleveland tend to earn lower salaries than people in expensive coastal areas, but in many ways the midwest- erners' quality of life is better. Even though they may make less money, it's easier to purchase a home and build equity while providing for a family," said Daryl Fairweather, Chief Economist at Redfin. "It's no secret there's an affordability crisis in high-priced places like the Bay Area, where modest homes can sell for well over $1 million." "But in most of the country, homes are still affordable on the typical local income. That's one reason people are looking to move to places like Phoenix, Atlanta, and Las Vegas, where homes are affordable on realistic incomes," Fariweather said. Just outside the 10 least-afford- able markets was Nassau County, New York, where 124% of the me- dian-household income is needed to afford an average-priced home, along with Sacramento and Riverside, California, where it re- quired 121% and 120%, respectively, of household income to afford a home. "It's no secret there's an affordability crisis in high-priced places like the Bay Area, where modest homes can sell for well over $1 million." —Daryl Fairweather, Chief Economist, Redfin The Shrinking of Single-Family Homes The size of single-family homes has been on the decline for a few years. Here's why. T he National Associa- tion of Home Builders (NAHB) reports that the size of single-family homes during Q2 2019 declined. The NAHB, with data from the Census Bureau's Quarterly Starts and Completions, reported that single-family square-footage fell to 2,245-square-feet. Single-family home sizes have been on the decline since 2015 when they averaged around 2,700-square-feet. Home sizes shrunk to nearly 2,100-square-feet a decade during the housing crisis. The NAHB states that the post- recession pattern of the increas- ing size of single-family homes is consistent with historical data following a recession. "Typical new home size falls prior to and during a recession as homebuyers tighten budgets, and then sizes rise as high-end home- buyers, who face fewer credit constraints, return to the housing market in relatively greater pro- portions," the report states. The pattern, according to the NAHB, was "exacerbated" recently due to market weakness among first-time buyers and supply con- straints in the building market. Additionally, home sizes will continue to trend lower with builders focusing more on entry- level homes as the custom market levels off. The reported lack of inventory, especially in entry-level homes, is causing first-time buyers to wait longer than expected. A study by revealed that of the expected homebuyers this year, 42% were shopping for a home for the first time, and the search for their first home took longer than ever. The study found that a quarter of the first-time buyers searched for a home for more than a year ompared to 11% two years ago. Also, a third of first-time buyers were in the market for more than six months, compared to 18% two years ago. "First-time buyers are usu- ally younger and are motivated by getting married or starting a family," said Danielle Hale, Chief Economist at "They're looking for the type of home where they can have it all: Space, affordability, and a good school system." added that 45% of new buyers are searching for homes in small towns and rural areas, 34% are in suburbs, and 16% plan to stay in the city.

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