Florida Mortgage Market, Southern U.S. Bask in Real Estate Sunshine

Good news for home buyers south of the Mason-Dixon Line: You’re shopping in one of the two most affordable regions in the country.

While Dixie and Florida home prices aren’t quite as good as the Midwest, the region still offers better than average deals according to the Housing Affordability Index, compiled regularly by the National Association of Realtors (NAR).

The index looks at home prices in an area, along with salaries, the percentage of income homeowners are spending on a Florida mortgage and a host of other factors. The result: a pretty good indication of just how much home you could buy. And this is one index where, to get the most home for your dollar, you want to see the highest number possible.

A score of 100 means that someone earning the area’s median income can afford to buy a median-priced home. And “if the number is 125, it means that a typical person has 25 percent more income than is necessary to buy a typical median-priced home,” says Lawrence Yun, a senior economist for NAR.

In the South the index was 119.8 - 5.1 percent better than 2005. That’s topped only by the Midwest which had an index figure of 150.8 - 7.1 percent better than the same time last year.

And the outlook for buyers all over the country has been getting better: “The affordability index has been improving, as of late,” says Yun. “People’s incomes are rising, and home prices have stalled or are, in some cases, declining. The national index is up 2.8 percent to 109.3.”

Location still matters
With a median income of $53,179, a buyer can purchase 20 percent more house for the money in southern areas such as the Florida housing market, according to recent NAR statistics.

But numbers don’t tell the whole story. The median home price across the region is $181,700, but a buyer looking in the Miami/Fort Lauderdale area will see median prices of $366,800. And while the area has seen some price decreases, the southeast Florida coast is still one of the most expensive areas of the region, according to the most recent NAR numbers.

Farther north and inland, Orlando housing market buyers are seeing median prices of $272,100, according to NAR’s most recent statistics.

Some of the areas that include some of least expensive median home prices in the South, according to the most recent sales figures from the NAR:

• Cumberland Md./W.Va. – $98,000
• Amarillo, Texas – $108,300
• Charleston, W.Va. – $114,300
• Beaumont/Port Arthur, Texas – $120,000

And some of the most expensive median homes in the region are in:

• Washington, D.C./Arlington/Alexandria, (D.C., Va., Md.) – $421,600
• Miami/Fort Lauderdale/Miami Beach – $366,800
• Sarasota/Bradenton/Venice, Fla. – $301,300
• Baltimore/Towson, Md. – $277,900

For those contemplating a Florida mortgage loan: this region is home to expensive areas that “may see some price declines” of as much as 5 to 10 percent during the first six months of 2007, says Yun. Over the entire year, prices in the state could grow 0 to 2 percent.

For the region, look for price increases of 4 to 6 percent in 2007, he says.

Southerners are also spending a smaller than average portion of their income on their mortgage payments. In the South, a home owner devotes approximately 20.7 percent of income to that mortgage check, according to NAR numbers. The national average is 23.6 percent.

But higher Florida mortgage rates help make homeownership slightly more expensive in the South. Southerners paid the highest rate of any region: 6.51 percent in 2006, according to NAR data. (The Northeast and Midwest tied for lowest rates with 6.39 percent.)

The difference is minimal. On a $181,700 home (the region’s median price) after 20 percent down, that amounts to $4,121 over the life of a 30-year mortgage or just over $11 a month.

Even though the prices aren’t the lowest in the country, the South has the sunniest picture for would-be homeowners this year, says Yun. A combination of affordable prices, job growth above the national average, and relatively low interest rates mean that “if people have jobs they can own a home if they have good credit.”

SOURCE: Bankrate.com