Sun, June 23, 2024

Simon Says: Can you afford to live in Augusta?

I ask my students at the beginning of an introduction to an economics course, “What are the most pressing problems economists should be addressing today?” The top answer recently has always been inflation, but this year, housing made the top three problems (the other was healthcare costs).

The Federal Reserve Bank of Atlanta produces a Home Ownership Affordability Monitor (HOAM – get it?) for all Metropolitan Statistical Areas (MSAs) in the US. The monitor measures the ability of a median-income household to afford a median-priced home. Affordability is defined as the annual costs of homeownership is less than 30 percent of income. Any HOAM index number greater than 100 represents a metro area that is affordable. The chart below presents the HOAM for Georgia MSAs. Only Rome and Warner Robins are affordable.

This is concerning for Augusta because when we try and attract people to the area, one thing I always hear is how affordable it is. In fact, from January 2014 through April 2022, the Augusta MSA was affordable. In that time, median house prices have jumped $14,000 while median income has increased only $4,600. Additionally, mortgage rates have increased from 5% to 6.6%, increasing monthly payments by $300.

Houses in Columbia County are still affordable (HOAM = 104.9). Although the median house price is $308,333, the median household income is $93,307.

The good news is the HOAM has been improving over the last six months as incomes have risen and house prices have fallen.

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