How adding $1K to cost of house impacts affordability in various US metros
One of the newest fees being considered today is mandatory fire sprinklers in new homes. That could add at minimum another $5,000 to the cost a home.
As noted, increasing the cost of a home by $1,000 would have a different price-out effect on different metros.
The top five cities where $1,000 would affect the market the most are Chicago, New York, Los Angeles, Dallas and Houston. Even here there are discrepancies, Siniavskaia said.
Increasing the price of a new home in the Chicago metro by $1,000 disqualifies more than 6,000 households from buying a home. This is by far the largest price-out effect in the nation, partially because it is a relatively affordable metro area where 43 percent of households can afford a new home, and partially because it is a populous area with almost 3.5 million households residing there.
The second-largest number of price-out households is the New York metro where more than 5,000 households will be priced out. Even though this metro is double the size of the Chicago area, the price-out effect is smaller, simply because the area is less affordable to begin with.
At the bottom of the rankings, the markets where $1,000 would have the least price-out effect are the communities where homes are very high-priced and unaffordable to most Americans. These metros are: Napa, Calif.; Ocean City, N.J., Carson City, Nev.; and Sebastian-Vero Beach, Fla.
In Napa, where half of all new homes sell for more than $700,000, adding another $1,000 to the price would affect a total of 14 households since only 13 percent of the households can afford such an expensive new home in the first place.
If the price of a new home in Napa or Ocean City goes up by $1,000, who cares? So few of us can buy in those communities anyway!
Steve Bergsman is a freelance writer in Arizona and author of several books. His latest book, "Growing Up Levittown: In a Time of Conformity, Controversy and Cultural Crisis," is now available for sale on Amazon.com.
|Contact Steve Bergsman:|
|Letter to the Editor|
What's Your Home Worth?
Alyssa Hellman joins BHGRE Go Realty