RealtyTrac: 18% of U.S. Housing Markets Less Affordable than Historic Norms
RealtyTrac, Irvine, Calif., released its Q2 2016 Home Affordability Index, which shows that 18 percent of U.S. county housing markets were less affordable than their historically normal levels in the second quarter, up from 5 percent of markets in the previous quarter but down from 20 percent of markets exceeding historically normal home affordability levels a year ago.
Of the 417 counties analyzed in the report, 74 counties (18 percent) had an affordability index below 100 in the second quarter, meaning buying a median-priced home was less affordable than the historically normal level for that county going back to first quarter 2005. That was up from 22 counties (5 percent) exceeding historically normal affordability levels in the first quarter but down from 82 counties (20 percent) exceeding historically normal affordability levels a year ago.
“Although nearly one in five U.S. housing markets was not affordable by historic standards in the second quarter, the good news is that affordability is improving compared to a year ago in the majority of markets thanks to a combination of slowing home price appreciation and accelerating wage growth, along with falling interest rates,” said Daren Blomquist, senior vice president with RealtyTrac.
The report said annual wage growth outpaced annual home price growth in 228 of the 417 counties analyzed (55 percent), including Miami-Dade County, Fla.; Kings County, N.Y. (Brooklyn); Santa Clara County, Calif. in the San Jose metro area; Wayne County, Mich. in the Detroit metro area; and Bexar County, Texas in the San Antonio metro area. Prior to the second quarter, annual home price growth had outpaced annual wage growth in more than half of the 417 counties analyzed for 16 consecutive quarters going back to second quarter 2012.
Annual home price growth still outpaced wage growth in 189 of the 417 counties (45 percent), including Los Angeles County, Calif.; Cook County, Ill. (Chicago); Harris County, Texas (Houston); Maricopa County, Ariz. (Phoenix); and San Diego County, Calif.
The report said buying a median priced home in the second quarter required 35.4 percent of average weekly wages on average across all 417 counties analyzed for the report.
Counties least affordable by the absolute standard of percentage of wages needed to buy a median priced home were Kings County (Brooklyn), N.Y. (121.7 percent of average weekly wages to buy a median-priced home); Marin County, Calif. (118.1 percent); Santa Cruz County, Calif. (113.5 percent); San Francisco County (94.6 percent); and Maui County, Hawaii (92.8 percent). Other counties among the top 25 least affordable by historic standards included counties in Los Angeles, Honolulu, Sacramento, San Diego, and San Jose.
Counties most affordable by the absolute standard of percentage of wages needed to buy a median-priced home were Clayton County, Ga. in the Atlanta metro area (10.4 percent of average weekly wages to buy a median-priced home); Wayne County, Mich. (Detroit) (10.9 percent); Baltimore City, Md. (11.6 percent); Bay County, Mich. (12.3 percent); and Rock Island County, Ill. in the Davenport-Moline-Rock Island metro area (12.4 percent). Other markets among the top 25 most affordable by absolute standards included counties in Philadelphia, Cleveland, Milwaukee, Cincinnati and St. Louis.
