ATTOM: Homeownership Slips into ‘Unaffordable’ in 4Q
ATTOM Data Solutions, Irvine, Calif., said median home prices of single-family homes and condos in the fourth quarter of 2020 were less affordable than historical averages in 55 percent of counties with enough data to analyze, up from 43 percent a year ago and 33 percent three years ago.
However, the company’s fourth-quarter U.S. Home Affordability Report saidet rising wages and falling mortgage rates still helped keep median home prices close to affordable for average wage earners across the country.
Compared to historical levels, 275 of the 499 counties analyzed in the fourth quarter, or 55 percent, were less affordable than past averages, up from 217 of the same group of counties a year ago and 164 in fourth quarter. The fallback came as continued spikes in median home prices of at least 10 percent over the past year in most of the country outpaced the impact of increasing wages and declining mortgage rates to historic lows. Those price increases occurred as the U.S. housing market kept booming despite economic troubles related to the ongoing coronavirus pandemic.
With prices rising faster than earnings, ATTOM reported major home-ownership expenses consumed 29.6 percent of the average wage across the nation during the fourth quarter, up from 26.4 percent a year ago and above the 28 percent benchmark lenders prefer for how much homeowners should spend on those major expenses – mortgage payments, insurance and property taxes. Those costs exceeded the benchmark in 59 percent of the counties included in the fourth-quarter report.
“Owning a home in the United States slipped into the unaffordable zone for average workers across the nation in the fourth quarter as the numbers continued a year-long slide in the wrong direction,” said Todd Teta, chief product officer with ATTOM Data Solutions. “The latest housing market data shows the average worker unable to meet the 28 percent affordability guideline used by lenders. That’s happened as home prices have continued rising throughout 2020 and the housing market has remained remarkably resilient in the face of the brutal economic fallout from the coronavirus pandemic. The future remains wholly uncertain and affordability could swing back into positive territory. But for now, things are going in the wrong direction for buyers.”
Other report findings:
–Among the 499 counties in the report, 203 (41 percent) had major home-ownership expenses on typical homes in the fourth quarter that were affordable for average local wage earners.
–Home price appreciation outpaced average weekly wage growth in the fourth quarter in 460 of the 499 counties analyzed in the report (92 percent. Average annualized wage growth outpaced home price appreciation in the fourth quarter in only 39 counties.
–Annual wages of more than $75,000 were needed in the fourth quarter to afford the typical home in 124, or 25 percent, of the 499 markets in the report. The highest annual wages required to afford the typical home was in San Mateo County, Calif. ($282,117). The lowest annual wages required to afford a median-priced home in the fourth quarter was in Bibb County, Ga. ($19,188).
–Among the 499 counties analyzed in the report, 275 (55 percent) were less affordable in the fourth quarter than their historic affordability averages, up from 43 percent of the same group of counties a year ago.