Housing affordability varies dramatically depending on where you live.
A new Realtor.com report released this week graded the nation’s 100 largest metro areas based on housing affordability and the pace of new home construction.
Joel Berner, senior economist at Realtor.com, told FOX Business that the rankings were designed to capture the current state of each housing market, as well as its long-term trajectory.
“It’s really a balanced look at the present and the future for how things are affordable now and how they might be affordable in years to come,” Berner said.
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Many metros across the Midwest and Sun Belt regions ranked high on the list, while several higher-cost coastal cities ranked near the bottom.
Des Moines, Iowa, topped the rankings with an A+ grade, followed by Raleigh, North Carolina; Columbia, South Carolina; Houston, Texas; and Indianapolis, Indiana.
Los Angeles ranked last with an F, followed by Providence, Rhode Island; New York City; Honolulu; and Boston.
The report comes as the U.S. continues to grapple with a housing shortage of more than 4 million homes after years of underbuilding, according to Realtor.com.
“Builders are getting squeezed on both sides,” Berner said. “Their costs are going up, whether it’s materials, labor or the cost of regulation. … And on the demand side, they’re seeing depressed buyer activity because of high mortgage rates and low buyer affordability.”
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According to Berner, the highest-ranked metros generally have local governments that make it easier and faster to build new housing.
“They have local government facilitating new projects, not getting in the way, not having really restrictive zoning laws, having quick permitting processes,” he said.
“And these are places with strong job markets that are growing really fast, and the cities are allowing builders to absorb that increasing demand for homes in these growing cities by building a lot of them.”
Many of those markets also have abundant land, Berner added.
“Those places really have some advantages that the coastal cities don’t,” Berner said. “Land is much more available. … They’re also incentivizing these builders to produce dense urban housing as well as the kind of suburban developments that the developers have been working on for a number of years.”
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Berner said that local officials hoping to improve affordability should start by revisiting zoning rules.
“I think the first thing they should do is look at their local zoning ordinances,” Berner said.
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