ATTOM: Home Affordability Reaches Two-Year High
ATTOM Data Solutions, Irvine, Calif., said owning a median-priced home in the first quarter– costing $252,500 – consumes 31.1 percent of the national average wage, down from 31.4 percent in the fourth quarter and 31.6 percent a year ago to the lowest percentage since fourth quarter.
But the company’s First Quarter 2020 U.S. Home Affordability Report also pointed out median home prices in the first quarter remain unaffordable for average wage earners in 66 percent of U.S. counties analyzed in the report. However, that figure is down from 70.4 percent in the fourth quarter and 69.8 percent a year ago.
“Home affordability has inched ahead this year across the United States as buying a house or a condo gets closer and closer to the level where the average wage earner can swing the deal within standard lending guidelines,” said Todd Teta, chief product officer with ATTOM Data Solutions. “While the national median price still remains a bit out of reach for the average wage earner, the affordability gap has narrowed to the smallest point in more than two years. It seems bizarre that median home prices have risen 8 percent over the past 12 years while average wages grew by less than half that amount. But falling interest rates continue making up the difference, dropping monthly home ownership payments in a majority of the country.”
Teta said all that could “change in a huge way” over the next few months as the impact of the coronavirus hits the housing market. “We are entering a period of great uncertainty,” he said. “But in the initial months of the year, the picture has appeared to continue to brighten for home seekers.”
The report said unaffordability was most prevalent in large metro areas, such as Los Angeles County; Maricopa County (Phoenix); San Diego County; Orange County, Calif.; and Miami-Dade County, Fla. However, ATTOM said 164 counties (34 percent) where a median-priced home in the first quarter is affordable for average wage earners included Cook County (Chicago); Harris County (Houston); Dallas County, Texas; Wayne County (Detroit); and Philadelphia County, Pa.
Other report findings:
–Home price appreciation outpaced wage growth in 64 percent of markets.
–At least 30 percent of wages was needed to buy a home in more than half of markets surveyed. By contrast, 195 counties (40.4 percent) require less than 30 percent of their annualized weekly wages to buy a home.
–Two-thirds of markets were more affordable than historic averages.
–One-third of markets were less affordable than historic averages.