Black Knight: Housing Remains Affordable Despite Price Acceleration

Black Knight, Jacksonville, Fla., said despite continued home price acceleration over the past several years, U.S. housing remains more affordable than long-term benchmarks.

The company’s monthly Mortgage Monitor Report noted nationally, home buyers require 21.4 percent of their median income to purchase a median-priced home as of September, compared to 24.2 percent from 1995-1999 and 26.2 percent from 2000-2003.

Black Knight Executive Vice President of Data & Analytics Ben Graboske while accelerating home price appreciation has hampered home buyers’ potential savings, home prices remain relatively affordable in many parts of the country.

“Even with the monthly payment needed to purchase the median-priced home up $100 from one year ago, the national ‘payment-to-income’ ratio remains 2.8 percent below the 24.2 percent average in the late 1990s and 4.9 percent behind the 26.2 percent average from 2000-2003 prior to the run-up in home prices that eventually peaked in 2006,” Graboske said.

The report noted varying levels of affordability in each market compared to their own long-term benchmarks. “But, by and large, the overall theme is that affordability in most areas, while tightening, remains favorable to long-term norms,” Graboske said.

State-level data showed payment-to-income ratios in 47 of 50 states remain below their 1995-2003 averages. Only Hawaii, California, Oregon and Washington, D.C., have higher payment-to-income ratios today than their longer-term benchmarks.

The report outlined scenarios over continued price appreciation, noting Black Knight’s August Black Knight Home Price Index showed the annual rate of home price appreciation has accelerated from 5.6 percent entering the year to more than 6.2 percent.

“Under optimistic scenarios, most states remain below long-term benchmarks even with home prices rising at current rates for another year,” Graboske said. “However, under pessimistic scenarios–including significant increases in the 30-year fixed interest rates–affordability could surpass long-term norms in a number of states by this time next year.”

Other report highlights as of September:

–Total U.S. loan delinquency rate: 4.40%

–Month-over-month change in delinquency rate: 11.85%

–Total U.S. foreclosure pre-sale inventory rate: 0.70%

–Month-over-month change in foreclosure pre-sale inventory rate: -7.17%

–States with highest percentage of non-current loans: Mississippi, Louisiana, Florida, Alabama, Texas

–States with lowest percentage of non-current loans: Washington, Minnesota, Oregon, North Dakota, Coloado

–States with highest percentage of seriously delinquent loans: Mississippi, Louisiana, Alabama, Arkansas, Tennessee.