The U.S. housing market has been in recovery mode the last two years, and despite gains, some areas remain in dire straights.

If the real estate industry can be thought of as its own world, then consider the bursting of the housing bubble as an asteroid smacking into the side of it. Even though we’re nearly seven years removed from then initial 2007 impact, a significant portion of the country’s real estate markets, like smoldering craters, are finding it difficult to maintain the success they had managed in a pre-crisis environment. However, at the same time, some markets are flourishing and even surpassing historic averages. At least, that was the discovery of an affordability report released early this month by RealtyTrac.

Considering both the percentage of median income needed to make monthly payments on a median-priced home and historical trends regarding income-to-price affordability percentages, researchers evaluated more than 1,000 counties using data from as far back as 2000.

In Fulton County, which harbors the state’s biggest city in Atlanta, the report reads, prices remain high relative to the market’s past performance.

Affordability Remains the Norm

Nationally, RealtyTrac’s report tells the story of an industry in recovery, which makes sense considering the turmoil most markets have had to wade through. Here’s what researchers found:

• 401 counties, representing nearly 19 percent of the total population, maintained income-to-price affordability percentages higher than historical averages, making them less affordable overall.
• 793 counties, representing more than 80 percent of the population, maintained income-to-price affordability percentages lower than historical averages, making them more affordable overall.
• If interest rates rise a quarter of a percentage point, which is expected, then approximately 461 counties, representing 30 percent of the total population, will have income-to-price affordability percentages pushed past their historic averages.

Will Rising Interest Rates Threaten Affordability?

Even from a cursory glance, it’s easy to see that things could be worse in the housing universe, and RealtyTrac Vice President Daren Blomquist agrees.

“The good news is that none of the nearly 1,200 counties we analyzed for the second quarter has regressed to the dangerously low affordability levels reached during the housing-price bubble,” he says. “But the scales are beginning to tip away from the extremely favorable affordability climate we’ve seen over the last two years, with one-third of the counties analyzed – representing 19 percent of the total population – now less affordable that their long-term averages.”

Even so, Blomquist is quick to point out that a majority of Americans still live in areas where affordability lingers below long-term averages, but adds that if buyers are searching for an affordable market with a good job climate, then they need look no further than the Midwest, to places like Columbus, Ohio and Omaha, Neb., where housing is cheap and unemployment rates are below five percent.