The American real estate market is currently experiencing a slowdown. Though home prices have been mapping a sluggish way upwards, the still-improving inventory levels have kept cost of buying a home high. Mortgage rates may be low, but the standard of lending is strictly tight.
In these conditions, where does one look to buy a home? To help you evaluate and make a property purchase decision, RealtyTrac - the popular real estate intelligence firm - has come up with lists of American cities where buying a property is most and least affordable.
To compile the list, RealtyTrac calculated the income to price affordability ratios in 2,270 counties across America. The higher the ratio, lower is the affordability rate.
Below are the top five most affordable areas:
1. Chattooga County, Ga. - Affordability rate: 3.75%
2. Lake County, Tenn. - Affordability rate: 5.75%
3. Edgecombe County, N.C. - Affordability rate: 6.17%
4. Upson County, Ga. - Affordability rate: 6.31%
5. Barnwell County, S.C. - Affordability rate: 6.81%
And these are the five least affordable counties:
1. San Francisco County, Calif. - Affordability rate: 78.1%
2. Kings County, N.Y. - Affordability rate: 76.9 %
3. Teton County, Wyo. - Affordability rate: 75.4%
4. New York County, N.Y. - Affordability rate: 75.3%
5. Bronx County, N.Y. - Affordability rate: 67.5%
According to 24/7 Wall Street, most of the affordable markets have become cheaper in the recent past mostly because demand for homes in these markets is pretty low.
But in a separate study, Harvard Kennedy School Professor Edward Glaeser explained that a large number of Americans are flocking to these cities because prices are relatively more attractive. Markets where prices are low, household incomes are also low. Calling these cities "unhappy", the professor determined that the high price in the happier places (economically better off areas) is driving them to cheaper areas.
More recently, the S&P/ case Shiller Index showed that the pace of home prices across states have slowed down. It also revealed that inventory of homes have accelerated. But, analysts note that most of the pick-up in inventory came from the rise in multi-family units, which usually attract low income renters.
So, if you are ready to pack bags and leave, experts warn of treading cautiously.
