5 Housing Markets That Are Still Scary

Happy Halloween! The American economy is finally on the road to recovery, after the effects of the financial collapse that once crippled it are slowly waning.

The collapse was largely caused by a corresponding boom and bust in the housing market -- and while things aren't nearly as bad as they once were when it comes to affordability, there are still a few markets where home prices remain a terrifyingly unaffordable.

Every quarter, the National Association of Home Builders and Wells Fargo release the Housing Opportunity Index, which measures how affordable homes in specific areas are based on a variety of factors. Of course, the home price and the area's average income are taken into consideration, but so are taxes, insurances, and a variety of other things.

Broader home affordability in the United States has rebounded sharply since the lows of 2006:

Source: National Association of Home Builders

In the most recent quarter, 69.3% of homes sold were considered affordable for the people buying them, a sharp increase from only 40.4% of home sales in the third quarter of 2006, the lowest and worst reading on record.

Robert Denk, assistant vice president for forecasting and analysis at the NAHB, said of the 2006 lows that it was simply "just the housing bubble ... as house prices pretty much peaked in 2006 and there you saw the extremes in unaffordability."

He continued: "[T]he price declines all over the country [have] brought all of the numbers down, and everywhere is more affordable now than it was at the height of the bubble." Yet while the broader economy has seen the percentage of affordable homes sold rising by almost 30% over the past seven years, there are still five markets where things aren't nearly as bright.

Although things have certainly improved since 2006, these five big cities are the ones closest to their low levels of affordability in 2006, and the prospect of finding an affordable home there remains downright scary. 

Beyond housing
While knowing whether you live in affordable area is important, it's equally important to know what to do with your savings. Yet millions of Americans have waited on the sidelines since the market meltdown in 2008 and 2009, too scared to invest and put their money at further risk. However those who've stayed out of the market have missed out on huge gains and put their financial futures in jeopardy.
 In our brand-new special report, "Your Essential Guide to Start Investing Today," The Motley Fool's personal finance experts show you why investing is so important and what you need to do to get started. Click here to get your copy today -- it's absolutely free.

Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2706334, ~/Articles/ArticleHandler.aspx, 9/27/2016 8:17:14 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 11 hours ago Sponsored by:
DOW 18,094.83 -166.62 -0.91%
S&P 500 2,146.10 -18.59 -0.86%
NASD 5,257.49 -48.26 -0.91%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes