Ogden ranks high for housing affordability

A new national index ranks Ogden high for housing affordability, saying it is the most affordable metro area in Utah for buying a home, one of the top five places in the West and in the top 100 metros nationally. In fact, thanks to low interest rates, housing affordability in the Ogden-Clearfield metro has actually improved in the past year even though home prices have gone up.

These findings come from the new Housing Opportunity Index from the National Association of Home Builders that studies housing affordability in 234 metro areas throughout the country. The trade association looks at local home prices, interest rates and incomes to determine whether homes are in reach for the area’s residents. NAHB assumes that a family can afford to spend 28% of its gross income on housing, uses a 30-year fixed-rate mortgage and has a 10% down payment.

In the Ogden-Clearfield metro area, 80% of homes sold during the second quarter were affordable to a family making the median income of $72,400. The median price of homes sold was $318,000.

That puts Ogden-Clearfield as No. 4 for affordability out of 71 metros in the West, just behind Sierra Vista-Douglas, Ariz.; Fairbanks, Alaska; and Great Falls, Mont. The least affordable metro in the West — and also the country — is San Francisco-Redwood City-South San Francisco where the median home price is $1.4 million, and only 8.5% of homes are in reach to families making the median income of $129,200.

Nationally, Ogden-Clearfield ranks No. 97 among the most affordable metro areas in the U.S. The most affordable metro area in the country is Cumberland, Md.-W.Va, where nearly 97% of homes sold are considered in reach for those making the median income.

“Home prices appreciated robustly during the second quarter due to better-than-expected housing demand in the wake of the pandemic and because the coronavirus hindered the ability of builders to ramp up production,” said Robert Dietz, chief economist of the National Association of Home Builders. “Looking forward, in this record-low interest rate environment, housing should be a bright spot for the economy as rising demand continues in the suburbs, exurbs and other lower density markets.”

Coming in second in Utah was Salt Lake City where 58% of the homes sold in the second quarter were attainable to those making the median income of $81,700. Even though the median home price has increased 7% in the past year from $356,000 to $381,000, low interest rates kept affordability about the same as last year.

The National Association of Home Builders report noted that average mortgage rates fell by 27 basis points from 3.61% in the first quarter to 3.34% in the second quarter.

The builders also highlighted the housing supply shortage and the difficulty builders are having in catching up to the housing demand, which is pushing up home prices.

“There was underbuilding before the pandemic hit, and the coronavirus outbreak has exacerbated the situation by disrupting existing supply chains,” said NAHB Chairman Chuck Fowke, a custom home builder from Tampa, Fla. “Builders are particularly concerned over surging lumber prices that are up nearly 70% since mid-April.”

Rising prices were also the norm in the Provo-Orem metro where they rose 4%, which combined with a decline in incomes, caused a slight decline in affordability. In the second quarter, nearly 54% of homes sold were affordable to those making the median income of $74,700. The median sales price was $375,000.

The situation was similar in the St. George metro, where nearly 50% of homes priced at $337,000 are considered in reach to families making $65,700.

To learn more about housing supply and affordability in your own area and neighborhood, contact a local Realtor. A directory of Utah Realtors is available at MyRealtorStory.com.