Happy Halloween! The American economy is finally on the road to recovery, after the effects of the financial collapse that once crippled it are slowly waning.

The collapse was largely caused by a corresponding boom and bust in the housing market -- and while things aren't nearly as bad as they once were when it comes to affordability, there are still a few markets where home prices remain a terrifyingly unaffordable.

Every quarter, the National Association of Home Builders and Wells Fargo release the Housing Opportunity Index, which measures how affordable homes in specific areas are based on a variety of factors. Of course, the home price and the area's average income are taken into consideration, but so are taxes, insurances, and a variety of other things.


Broader home affordability in the United States has rebounded sharply since the lows of 2006:


Source: National Association of Home Builders

In the most recent quarter, 69.3% of homes sold were considered affordable for the people buying them, a sharp increase from only 40.4% of home sales in the third quarter of 2006, the lowest and worst reading on record.

Robert Denk, assistant vice president for forecasting and analysis at the NAHB, said of the 2006 lows that it was simply "just the housing bubble ... as house prices pretty much peaked in 2006 and there you saw the extremes in unaffordability."

He continued: "[T]he price declines all over the country [have] brought all of the numbers down, and everywhere is more affordable now than it was at the height of the bubble." Yet while the broader economy has seen the percentage of affordable homes sold rising by almost 30% over the past seven years, there are still five markets where things aren't nearly as bright.

Although things have certainly improved since 2006, these five big cities are the ones closest to their low levels of affordability in 2006, and the prospect of finding an affordable home there remains downright scary. 

Beyond housing
While knowing whether you live in affordable area is important, it's equally important to know what to do with your savings. Yet millions of Americans have waited on the sidelines since the market meltdown in 2008 and 2009, too scared to invest and put their money at further risk. However those who've stayed out of the market have missed out on huge gains and put their financial futures in jeopardy.
 In our brand-new special report, "Your Essential Guide to Start Investing Today," The Motley Fool's personal finance experts show you why investing is so important and what you need to do to get started. Click here to get your copy today -- it's absolutely free.

The article 5 Housing Markets That Are Still Scary originally appeared on Fool.com.

Fool contributor Patrick Morris has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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