Housing Affordability in Metro Phoenix

housing affordability in Phoenix

How affordable is homeownership for a Phoenix household with a median income?

The Housing Affordability Index (HAI) is a measure of housing affordability for a family with a household income typical for a region. A value of 100 means that a family earning the median income for that area has just enough income to purchase a median priced home and handle the monthly mortgage payment. The higher that number goes, the more affordable home ownership is in that area. In an area rated with a 130 HAI, for example, a family earning the median income has 130% of the income necessary to qualify for a conventional mortgage assuming a 20% downpayment. Obviously, the lower the HAI, the more difficult it will be for a median household income to qualify for a home loan (see San Francisco, Manhattan, San Diego).

How does Phoenix fare? Quite well, thank you. At an HAI of 162, the typical family has 162% of the income necessary to qualify for a median priced home. What is typical household income for the Phoenix metropolitan area you might ask? Well, in Maricopa County, the median household income is right around $55,000. Median priced home in the greater Phoenix area?  Approximately $220,000. We are in great shape. This also tells us that real estate continues to be a great investment in Phoenix. There is still a lot of room for housing prices to appreciate before it seriously impacts affordability for the average Phoenician.

What about affordability for millennials? I’m working with several new or “almost” families right now, who see the financial and other benefits of owning a home. They are wisely taking advantage of cheap money that they can leverage to build wealth. With new programs being rolled out which loosen credit and lower underwriting standards, the Arizona economy approaching full steam, and an HAI well above 100, we will see more first time buyers entering the market.

 

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  1. […] out of one hundred local metro forecasts (wahoo!). Our growing economy, sun-belt climate, and great housing affordability index leaves little to be desired in the Phoenix metro area. And when you look at who the buyers are […]

  2. […] workers to relatively affordable cities like Phoenix, Houston, Atlanta, and Charlotte, NC.’  The more affordable housing market in Arizona, just got significantly MORE […]

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