ATTOM: Home Affordability at Lowest Level in 10 Years

ATTOM Data Solutions, Irvine, Calif., said U.S. home prices in the third quarter were at the least affordable level since Q3 2008.

The company’s quarterly U.S. Home Affordability Report said its home affordability index of 92 was down from 95 in the previous quarter and 102 a year ago to the lowest level since Q3 2008, when the index was 87.

Among 440 U.S. counties analyzed in the report, 344 (78 percent) posted an affordability index below 100, meaning homes were less affordable than the long-term affordability averages for the county–the highest percentage of counties below historic affordability averages since Q3 2008.

“Rising mortgage rates have pushed home prices to the least affordable level we’ve seen in 10 years, both nationally and at the local level,” said Daren Blomquist, senior vice president with ATTOM Data Solutions. “Close to one-third of the U.S. population now lives in counties where buying a median-priced home requires at least $100,000 in annual income.”

Blomquist noted U.S. Census net migration data show negative net migration in more than two-thirds of those highest-priced markets, while more than three-quarters of markets requiring annual income less than $100,000 to buy a home posted positive net migration, “indicating that home affordability is at least one factor driving recent migration patterns.”

The report said prospective homebuyers would need to make $100,000 or more to buy a median-priced home in 69 of the 440 counties analyzed in the report (16 percent), assuming a 3 percent down payment and a maximum front-end debt-to-income ratio of 28 percent.

Nationwide, ATTOM said the median home price of $250,000 in the third quarter was up 6 percent from a year ago, twice the annual growth of 3 percent in average wages. U.S. median home prices have increased 76 percent since bottoming out in Q1 2012 while average weekly wages have increased 17 percent over the same period. Meanwhile the average 30-year fixed mortgage rate is up 15 percent since Q1 2012 and up 17 percent just over the past year.

The report said among 128 counties with a population of 500,000 or more, those with the lowest affordability indexes–least affordable relative to their long-term affordability averages–were Denver County, Colo. (70); Arapahoe County, Colo. (73); Tarrant County, Texas (74); Kent County (Grand Rapids), Mich. (74); and Jefferson County, Colo. (75).

Counties deemed most affordable were Bristol County, Mass. (117); Suffolk County (Long Island), N.Y. (113); Camden County, N.J. (113); Lake County, Ill. (111); and Jefferson County (Birmingham), Ala. (110).

ATTOM said an average wage earner would need to spend 37.0 percent of his or her income to buy a median-priced home in the third quarter, above the historic average of 34.1 percent. Counties with median home prices requiring the highest share of average wage earner income were Kings County (Brooklyn), N.Y. (134.8 percent); Marin County, Calif. (126.0 percent); Santa Cruz County, Calif. (120.7 percent); San Luis Obispo County, Calif. (100.5 percent); and Maui County, Hawaii (99.7 percent). Lowest share counties included Clayton County, Ga. (15.6 percent); Wayne County (Detroit), Mich. (15.8 percent); Allen County (Lima), Ohio (16.2 percent); Saint Lawrence County, N.Y., (16.9 percent); and Rock Island County, Ill. (18.7 percent).

The report said an average wage earner would not qualify to buy a median-priced home nationwide and in 368 of the 440 counties analyzed in the report (84 percent).