Business Week has a very useful table ranking the vulnerabilities of 30 metros areas, including Sacramento. As usual, the Sacramento housing market ranks near the top on the majority of risk indicators.
- Change in House Prices 2000-2005 (%)
- Ranked 4th (most appreciation)
- Housing Opportunity Index (high numbers are most affordable, 1-100)
- Ranked 4th (least affordable)
- Luxury Housing Affordability Index (numbers above 100 are more affordable)
- Ranked 7th (least affordable)
- Cost of Renting in Proportion to Cost of Owning (lower percentages mean renting is cheaper)
- Ranked 4th (cheaper to rent)
- Homes Bought as Investments, 2005 (%)
- Ranked 4th (highest)
- Purchase loans requiring interest only, 2005 (%)
- Ranked 6th (highest)
- Purchase loans permitting negative amortization, 2005 (%)
- Ranked 4th (highest)
- House Prices in America valuation (numbers above zero mean overvaluation) (%)
- Ranked 2nd (most overvalued)
CHANGE IN HOUSE PRICES
Change in average home prices from the fourth quarter of 2000 to the fourth quarter of 2005.
Data: Office of Federal Housing Enterprise Oversight.
HOUSING OPPORTUNITY INDEX
The percentage of nex and existing homes sold in the fourth quarter of 2005 that were affordable by a family earning the metro area’s median income.
Data: National Association of Home Builders.
BW'S LUXURY HOUSING AFFORDABILITY INDEX
BusinessWeek's own index of the affordability of luxury homes. It measures whether a family whose income is at the 90th percentile of area incomes (90% of families earn less; 10% earn more) can afford a house whose price is at the 90th percentile of all house prices in that area. It takes into account mortgage rates. As of fourth quarter, 2005.
Data: Fidelity National Inc., Federal Housing Finance Board, Dept. of Housing & Urban Development.
COST OF RENTING IN PROPORTION TO COST OF OWNING
Monthly cost of renting a house as a percentage of the monthly cost of owning a similar house, including mortgage payments and maintenance. As of 2005.
Data: Torto Wheaton Research, a unit of CB Richard Ellis.
HOMES BOUGHT AS INVESTMENTS
Percentage of homes purchased with a mortgage that are bought as investment properties, as noted on loan documents, in 2005.
PURCHASE LOANS REQUIRING INTEREST ONLY
Percentage of homes purchased with a mortgage requiring interest payments only, as noted on loan documents, in 2005.
PURCHASE LOANS PERMITTING NEGATIVE AMORTIZATION
Percentage of homes purchased with a mortgage allowing negative amortization, as noted on loan documents, in 2005. Interest that is owed but not paid is added to the loan’s principal.
HOUSE PRICES IN AMERICA VALUATION
Percentage of overvaluation (positive numbers) or undervaluation (negative numbers) based on a formula that takes into account house prices, interest rates, household incomes, population densities, and historical price patterns.
Data: Global Insight Inc. and National City Corp.