
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, March 25, 1994                   TAG: 9403250135
SECTION: BUSINESS                    PAGE: B8   EDITION: METRO 
SOURCE: associated press
DATELINE: WASHINGTON                                 LENGTH: Medium

HOMES MOSTLY AFFORDABLE

Despite rising mortgage rates, a home-builders' trade group maintained Thursday that housing is affordable in most of the nation, with loan costs still among the lowest in two decades.

Continuing a recent trend, the most affordable markets in the final three months of 1993 were mostly in the Midwest and South, according to the National Association of Home Builders. The least affordable generally were in the Northeast and the West, particularly California.

In fact, 17 of the 25 most affordable markets in the trade group's Housing Opportunity Index were in the Midwest. They included Jackson, Mich., which held onto the No. 1 ranking for the second straight quarter.

"Housing affordability conditions were excellent in the fourth quarter throughout the entire country and are still excellent, even though mortgage interest rates have risen slightly," said Tommy Thompson, association president and an Owensboro, Ky., builder.

Nationally, the index rose to 66.8 in the October-December period from 65.1 in the second and third quarters. It stood at 64.7 in the first three months of last year.

Thompson acknowledged, however, that "the slight uptick in mortgage rates during the last month will hurt those at the edge of affordability."

Least-affordable markets in other regions were El Paso, Texas, in the South; Stamford, Conn., in the Northeast, and Chicago in the Midwest.

The index measures the ability of the typical family to buy a home in its own market by comparing median family income with median home price. The median is the midpoint, meaning that half of the families earned more and half earned less, or that half of the homes cost more and half cost less.

"The key to building affordable homes is the availability and the price of land," Thompson said. "Where land is plentiful, like in Jackson, lot prices and home prices are much lower. In more congested areas, like the Northeast and California, lot prices are astronomical, making it impossible to build homes that are affordable to a majority of the population."

Nationally, the median home price in the fourth quarter was $112,000 and income was $39,700, meaning the typical household could afford to buy 66.8 percent of the homes offered for sale, up from 65.1 percent in the prior three months.

by CNB