ATTOM: Median Home Price Least Affordable Since 2008

ATTOM Data Solutions, Irvine, Calif, said U.S. home median home prices reached their least affordable level in nearly nine years.

The company’s second quarter U.S. Home Affordability Index fell to 100, the lowest level since third-quarter 2008 (86), meaning the share of average wages needed to buy a median-priced home nationwide was on par with its historic average. The median home price $253,000, was 7.7 percent higher than a year ago.

The report also noted 210 of 464 U.S. counties analyzed for the index (45 percent) were less affordable than their historic affordability norms in the second quarter, the highest share of markets less affordable than their historic norms since Q4 2009.

“While home price appreciation in the second quarter accelerated to the fastest pace in more than three years, wage growth turned negative, posting the biggest year-over-year decrease in five,” said Daren Blomquist, senior vice president with ATTOM Data Solutions. “That combination of accelerating home price growth and slowing wage growth, along with mortgage interest rates that are up nearly 50 basis points from a year ago, eroded home affordability nationwide to the lowest level in nearly nine years, and pushed the highest share of markets beyond the threshold of normal affordability in nearly eight years.”

Home prices rose faster than weekly wages in 403 of 464 markets analyzed (87 percent), ATTOM said. Since bottoming out nationwide in Q1 2012, median home prices nationwide have increased 69 percent while average weekly wages have increased 9 percent during the same period. Median home prices in King County, Wash. (Seattle) increased by 15 percent from a year ago while average weekly wages increased 3 percent annually.

Counties with the lowest affordability index (least affordable relative to historic norms for the county) in the second quarter were Denver County, Colo. (74); Genesee County, Mich. in the Flint metro area (75); Adams County, Colo. (77); Arapahoe County, Colo. (78); and Weld County, Colo. (78), all in the Denver metro area. Counties with the highest affordability index were Atlantic County, N.J. (161); Sussex County, N.J. (153); Onslow County, N.C. (147); Orange County, N.Y. (141); and Tolland County, Conn. (138).

ATTOM said nationwide in the second quarter, buying a median-priced home required 31.8 percent of average wages. Counties with the highest share of average wages needed to buy a median-priced home in the second quarter were Marin County, Calif. (126.4 percent); Kings County (Brooklyn), N.Y. (125.9 percent); Santa Cruz County, Calif. (112.3 percent); Summit County, Utah (107.8 percent); and Monroe County, Fla., (100.3 percent). More than 43 percent of average wages was needed to buy a home–the maximum debt-to-income ratio allowed for a “qualified mortgage” under guidelines from the Consumer Financial Protection Bureau–in 144 (31 percent) of markets. Average wage earners would need to spend less than 25 percent of their income to buy a median-priced home in 102 counties (22 percent) analyzed for the report.