A sophisticated new tracking tool has good news and bad news about housing affordability in Washoe County. The good news? Housing is getting ever so slightly more affordable.
The bad news? The typical family in Washoe County still doesn’t make nearly enough to afford to buy a typical home.
Economists Eugenia Larmore of EKAY Economic Consultants and Brian Bonnenfant of UNR’s Center for Regional Studies developed the new index.
It combines median housing prices, mortgage rates,
In the index, a score of 100 means that median incomes are sufficient to buy a median-priced house. If the score is below 100, it’s an indication that the region has affordability problems.
This spring, Reno MSA Housing Affordability Index stood at 84.89, which means the median family income (roughly $75,000) is about 15 percent below the level that’s needed to buy a median-priced $400,000 house.
Still, Larmore and Bonnenfant noted that the index showed a tiny improvement — 0.16 percent, to be exact — from the first three months of this year.
Family incomes are beginning to rise, they said, and recent declines in mortgage rates help reduce monthly payments.
Compared with a year ago, the second-quarter index showed an improvement of 3.5 percent, mostly because mortgages are cheaper.
Even though housing affordability is a much-discussed issue these days, the problem is nowhere close to pre-recession levels. When home prices were going through the roof in 2006, Larmore and Bonnenfant note, the housing affordability index stood at 63.65. That means the median income was more than 36 percent below the level needed to buy a house.
In 2012, after the housing market collapsed, the index stood at 176.6.