When it comes to housing, there are plenty of cities more expensive than Phoenix — but there are few that have seen affordability decline as rapidly recently.
Losing bang for the buck is now the American norm. After two years of steady affordability growth in the U.S. housing market, March brought a nationwide decline in affordability, according to a report by Santa Ana, California-based First American Financial Corp. (NYSE: FAF). The Phoenix metro showed the second-biggest drop in housing affordability among 50 major markets.
The study used the real house price index, or RHPI, which measures changes in housing price, income levels and interest rates to determine actual homebuying power. The higher the RHPI, the less affordable the market.
Kansas City, Missouri, topped the list with a 16.2% year-over-year increase in RHPI, followed by Phoenix (16%); Tampa, Florida (12.4%); Seattle (12.2%); and Austin, Texas (12.1%). The average change in RHPI among the top 50 metros was 3.5%.
“Phoenix and Tampa both had even faster nominal house price appreciation than Kansas City, but household incomes held steady in both markets, so the relative affordability loss was less than in Kansas City,” said First American Chief Economist Mark Fleming, who authored the report. “Seattle and Austin faced both faster nominal house price growth and lower household income, fueling declines in affordability in both cities. In all of these markets, the takeaway is that nominal house price appreciation accelerated to a level that eliminated any affordability gains from strong house-buying power.”
According to the S&P CoreLogic Case-Shiller Indices, Phoenix home price growth reached 20% in March, leading the nation for the 22nd consecutive month. Home prices in metro Phoenix averaged $470,200, up 24.8% year over year, and the median sales price was at $359,300, up 18.8% year over year, according to Arizona Regional Multiple Listing Service.
In March, home prices in metro Phoenix averaged $470,200, up 24.8% year over year, while the median sales price was $359,300, up 18.8% year over year, according to Arizona Regional Multiple Listing Service.
In a separate report, this one from RealtyHop, multiple Arizona cities appeared among the nation’s 50 least affordable cities.
The list compares U.S. Census data on median household income with median for-sale home listing prices via RealtyHop data; local property taxes via ACS Census data; and mortgage expenses, assuming a 30-year mortgage, 4.5% interest rate, and 20% down payment.
Scottsdale was highest on the June 2021 list, coming in at No. 25. Median income was $88,213, with the home price at $673,000 and average mortgage and tax costs at $3,022.92. The ranking was a two-spot drop from the previous month.
Further down the list was Glendale at No. 43, down one from the previous month. Its median income was $55,020, median home price was $350,000 and average mortgage expenses were $1,615.80.
No. 45 Phoenix — with a median income of $57,459, a median home price of $360,000 and average mortgage expenses of $1,652.16 — didn’t budge from last month. Mesa moved up a spot to No. 47. Its median income was $58,181, median home price was $359,900 and average mortgage expenses were $1,641.74.
Tucson moved up a spot from the previous month to No. 50. Its median income was $43,425, median home price was $250,000 and average mortgage expenses were $1,201.55.