Buying a Home? Kokomo, Ind., Is a Good Bet; However, S.F. Isn’t

The Indiana city of Kokomo, Ind., offered the most affordable housing in the country during the first quarter this year, the National Assn. of Home Builders said Thursday.

According to the builders’ specially constructed Housing Opportunity Index, Kokomo topped a list of 190 metropolitan areas for affordability with a reading of 89.5%.

That meant a Kokomo family earning the median income for the region of $46,000 could have qualified to buy 89.5% of the homes sold there in the first three months of this year.

The median price of a Kokomo home was $85,000. The median marks the midpoint, with half the homes sold going for less than $85,000 and half for more than that price.

And the least affordable market?

San Francisco, by a long shot, at 23%.

A San Francisco family earning the median income in the area of $64,400 could have afforded just 23% of the homes that changed hands in the first quarter this year.

Little wonder, since the median price of a San Francisco home was $288,000--the highest in the country.

The affordability index measures the proportion of homes sold in a specific market that a family earning a median income could qualify to buy. It takes into account differences in property tax rates and in property insurance rates in each community.

Nationally, housing affordability improved slightly during the first three months of 1997 from the final quarter of last year, rising to 66.5% from 64.1%.

The median sale price of a home nationally was $120,000 in the first quarter, the same as in the fourth quarter last year. But the national median income was up to $43,500 from $41,600, so potential buyers could afford more.

After Kokomo, the other top affordable housing areas, with their relative affordability and median sales prices, were: Baton Rouge, La. (88.9%, $85,000); Beaumont/Port Arthur, Texas (86.1%, $72,000); Elmira, N.Y. (86.1%, $60,000); and Wilmington-Newark, Del. (86%, $119,000).

The five least affordable were as follows: San Francisco; Portland, Ore. (30.8%, $147,000); Laredo, Texas (34%, $90,000); Santa Cruz/Watsonville, Calif. (35.4%, $217,000); and Santa Rosa, Calif. (35.6%, $190,000).

Kent Colton, chief executive of the builders’ association, said that “stable and relatively low” mortgage interest rates were bolstering the housing market.

An average long-term loan rate of 7.75% was used in calculating the first-quarter affordability index, up only fractionally from 7.73% in the final quarter last year.