Here are the 5 metro areas where the average American family can easily afford to purchase a median-priced home – and the 5 where they can’t.

Top 5 Most Affordable Cities

1. (tie): Indianapolis

Median home price: $96,000
Median income: $68,700
Affordability score: 94.9%

America’s most affordable housing market is the 33rd largest metro area in the United States, with 1.7 million people.

The median family income is fairly high — $68,700 — and median home prices are a very reasonable $96,000, according to the National Association of Homebuilders and Wells Fargo Housing Opportunity Index.

Helping keep home prices depressed is a fairly virulent foreclosure plague: There were more than 18,400 properties with foreclosure filings during 2009.

The turmoil in the auto industry, which Indianapolis had been closely associated with, has hurt the city. But increased diversification, which has made pharmaceutical companies, banks government agencies and insurers all important employers, has helped keep job losses in check. The unemployment rate was 9.5% in March, according to the Bureau of Labor Statistics, nearly matching the national rate of 9.7% that month.

2. (tie): Youngstown, Ohio

Median home price: $69,000
Median income: $53,500
Affordability score: 94.9%

Youngstown was a vibrant, wealthy steel city for many decades. Workers there were paid some of the highest factory wages anywhere.

But the mill closings of the late 1970s devastated the area’s economy, and about 40,000 manufacturing jobs have been lost. In March, 14% of workers in the area were idle.

As jobs vanished, the area’s population shrank, leaving lots of vacant homes for sale — from very modest row houses to huge mansions. That helps keep the median home price in the metro area very low — and boosts Youngstown’s affordability score.

Low interest rates also help. Financing 80% of a $69,000 home with a 30-year, fixed rate mortgage at 5% would result in a monthly payment of $296. At those kinds of prices, renters soon become homebuyers.

3. Syracuse, N.Y.

Median home price: $95,000
Median income: $64,300
Affordability score: 94.5%

A newcomer to the list, Syracuse is one of the many Upstate New York cities that grew up along the route of the Erie Canal, which made them wealthy. Syracuse’s importance as a transportation hub continues to this day, with two major interstates crossing here.

Much of the area’s economic base depended on manufacturing, and many of those industries have declined. While the metro area’s population has expanded modestly, the core city has shrunk to fewer than 140,000 from a post-war high of 220,000. That shrinkage means there’s much housing stock, keeping home prices very low.

The economy slowed during the recession and unemployment grew, but the rate — 8.5% during March — is still lower than the national average.

4. Dayton, Ohio

Median home price: $88,000
Median income: $61,700
Affordability score: 94.4%

The hometown of Wilbur and Orville Wright, Dayton still hosts a significant aerospace industry centered on the Wright-Paterson Air Force base

But the decline of heavy industry — including last year’s loss of the headquarters for NCR Corp., the old National Cash Register Co., to Duluth, Ga. — has pushed the city toward the service economy for job growth. That has not stemmed the unemployment tide; the rate stood at 12.3% in March.

The core city’s population has dropped from a peak of more than 260,000 in 1960 to about 150,000 today. The metro area population has also dropped slightly over the past 10 years, according to Census Bureau estimates.

That has lessened demand for homes and helped keep prices low; the median has hovered around $100,000, more or less, the entire decade. At the same time, median income has grown from about $55,000 to more than $62,000. That increase, coupled with very low mortgage rates, made home buying extremely affordable.

5: Grand Rapids, Mich.

Median home price: $102,000
Median income: $62,500
Affordability score: 93.7%

This medium-sized, western Michigan city flourished during the 19th century by turning nearby hardwood forests into furniture. Golden oak cabinets, dining tables and chairs once crafted in the area can now be spotted in many an antique store around the nation. Today, it still is a leading manufacturer of office furniture.

The metro area, like much of the industrial Midwest, has seen better days. Besides furniture, it also had a robust auto manufacturing base, which has declined along with the rest of the industry. Grand Rapids economy is now more diversified with health services an important employer. Still, many people are out of work; the metro area’s 12.8% unemployment rate is more than three percentage points higher than the national average.

The people who are employed make decent wages, over $62,000 for the median household, more than enough to afford a nice house.

There are many hundreds of homes for sale in the metro area for less than $90,000.

Top 5 Least Affordable Cities

1. New York

Median home price: $426,000
Median income: $65,600
Affordability score: 20.9%

Home prices can be staggeringly high in the New York City metro area, but median income is not commensurately high; it’s under $65,000. That combo makes this the country’s least affordable major metro area.

Affordability has improved lately: The median home price has fallen from about $500,000 at the market peak, and more properties are within reach now that mortgage rates are near historic lows.

After holding up better and longer than most housing markets, sales and prices around New York City have started to experience greater declines. The market is highly influenced by what’s happening on Wall Street; when financial markets sneeze, the real estate industry says “God bless you” with feeling.

Financial markets have stabilized a bit lately and investment banks are paying out bonuses. That could hasten a housing market recovery in the metro area.

2. San Francisco

Median home price: $585,000
Median income: $98,400
Affordability score: 23.4%

Home prices in the Bay Area rose during the last three months of 2009, dropping the percentage of affordable homes sold to 23.4.

Still, prices are way off from the heady days of 2006, when a median-priced house sold for $769,000, according to the NAHB-Wells Fargo Housing Opportunity Index. Now the median home is only $585,000.

It’s a good thing the area’s median income comes to a whopping $98,400, among the highest in the nation. Unemployment, however, is growing, and the 11% rate for the metro area puts it well above the national average.

That has contributed to the foreclosures that continue to plague the Bay Area. RealtyTrac figures show a total of more than 54,000 homes with filings in 2009.

3. Honolulu

Median home price: $403,000
Median income: $81,700
Affordability score: 34.7%

The biggest city and metro area in the Aloha State has been an expensive place to live for decades; little developable land and the need to import building materials from far away helped inflate home prices.

Median home prices have bounced around a lot, topping out at around $585,000 during the last three months of 2007 and dropping to $360,000 in the first quarter of 2009. They bounced back to $403,000 in early 2010.

The economy is as heavily dependent on tourism as any American city, and that industry has suffered as more Americans think twice about taking expensive vacations. Hotel occupancy rates declined for 18 consecutive months before starting to rise again last September. They have been up nearly every month since.

The metro area’s official unemployment rate stood at just 5.6% in March, well below the national average.

Foreclosures have been a mild but rapidly increasing problem, with just 3,985 properties having a foreclosure filings during 2009, according to RealtyTrac. That was 128th among 203 metro areas covered. That represented, however, a 671% increase over 2008.

If that trend continues, it could unleash a host of distressed properties on the market, which should bring down prices and raise affordability.

4. Santa Ana, Calif.

Median home price: $410,000
Median income: $87,300
Affordability score: 34.5%

Many of the booming Orange County economies were driven by the once-swelling housing bubble. Thousands of jobs were created in construction, the real estate industry, retail and mortgage lending. Once that bubble burst, a lot of these jobs disappeared.

The Bureau of Labor Statistics counts Santa Ana as part of the Los Angeles metro area for calculating unemployment rate and that, at 11.7% in March, was above the national average. Home prices have dropped substantially from the high they hit back in mid-2006, when the median Santa Ana home sold for $630,000. Prices have plummeted since; in the first three months of 2009, the median price was just $410,000. That caused affordability to improve but still only 34.5% of the homes sold were comfortably open to median-income earners.

5: Los Angeles

Median home price: $306,000
Median income: $62,900
Affordability score: 35.9%

As the post-war City of Angels filled in and up, with the population exploding to nearly 4 million in town and 13 million in the metro area, the area has mostly run out of land to build on. That has led to much higher development costs and home prices.

Still, L.A. values have fallen far from the bubble years, off nearly 40% since mid-2006. Affordability is improved as well, with 35.9% of homes sold falling in a range that median income earners could comfortably pay for.

With prices much lower and unemployment at 11.7%, many area homeowners are having a tough time staying out of foreclosure; there were filings on nearly 176,000 homes last year, the highest total for any metro area.

All those properties coming back on the market has depressed prices that would otherwise be far less affordable than they are now.

Source: Yahoo Real Estate
Submitted by: Paul Caldwell