In June 2007, some 42 markets out of the 380 tracked by Irvine, Calif.-based John Burns Real Estate Consulting's monthly Housing Cycle Barometer were designated as areas of significant afford-ability concern. One year later, that number had plummeted to just three: Baltimore, Md.; Miami; and Portland, Ore.

“It's been a significant drop,” says John Burns research analyst Erik Franks, who uses housing permit, interest rate, employment, and price data to determine affordability for the barometer. “Many markets have experienced 15 percent to 20 percent price decreases.”

Certainly the demand for affordable units in Portland is high. At Merlo Station, an affordable apartment project built by Tualatin Valley Housing Partners, 62 of the 128 units were filled prior to the grand opening. “Rents here have been going up,” says Whit Spencer, senior underwriter for Columbia, Md.-based Enterprise Community Investment, which financed the deal. “For people with lower income, it is all the harder to live in communities that they are attracted to.”

Still, Spencer cautions that market-rate housing that becomes more affordable is not the same as affordable housing. “There is plenty to rent at $1,000 per unit, and for a lot of folks, that is affordable,” he says. “Whether or not there is a true increase in national affordability is a difficult question to answer.”

In Delray Beach, Fla., the Auburn Group is facing that question as it breaks ground on what is billed as the state's largest affordable housing community. The 324-condo, 264-rental complex had 300 people show up for an open house, resulting in 22 condo contracts. “Prices have come down considerably,” says Auburn vice president Brian Hinners. “But with new product that is now excess supply, those units began at far higher price levels than where we are as affordable housing providers.”

According to Franks, the affordability issue will continue to evolve as the housing market stabilizes. “We expect prices to continue declining until demand and supply return to a balanced level,” he says. “Any improvement in housing affordability is a good improvement.”