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Median-priced homes are out of reach for the average Joe in most markets

For average earners, these homes are unaffordable in nearly 75% of markets

A median-priced home too expensive for the average wage earner in 71% of U.S. counties, according to the latest report from ATTOM Data Solutions, highlighting a growing affordability problem that is plaguing the country as home prices continue to rise.

ATTOM’s report calculated the income needed to make monthly house payments on a median-priced home, assuming a 3% down payment and 28% front-end debt-to-income ratio.

The income required to meet these payments was compared against annualized average weekly wage data from the Bureau of Labor Statistics.

Based on this calculation, it determined that median-priced homes are unaffordable for average wage earners in 335 of the 473 counties considered.

“We are seeing a housing market in flux across the United States, with a mix of tailwinds and headwinds that are pricing many people out of the housing market, but also are creating potentially better conditions for buyers,” said Todd Teta, ATTOM’s chief product officer.

“Continually rising home prices in many areas do remain a financial stretch – or simply unaffordable – for a majority of households,” Teta continued. “However, quarterly wage gains have been outpacing price increases for more than a year and mortgage rates are falling, which have helped make homes a bit more affordable now than they’ve been in a year.”

Nationwide, average earners needed to spend 32.7% of their income to buy a median-priced home in the first quarter of 2019, which is on par with historical averages.

The highest share of income was needed to buy homes in San Francisco, Maui, Manhattan and Brooklyn, New York.

And, according to the report, in 49% of markets, home price appreciation outpaced wage growth.

ATTOM’s study also revealed that 49% of markets were less affordable than the historical average in the first quarter of 2019. This is an improvement over the previous quarter, when 76% of counties were less affordable, but not great compared with one year ago, when 42% of markets were less affordable than the historical average.

Teta said the current climate suggests we’ll see the housing market begin to favor buyers.

“Affordability may improve because of the simple fact that homes are out of reach for so many home seekers, suggesting that prices need to moderate up in order to attract buyers,” Teta explained. “Of course, a few quarters do not a long-term trend make. The economy could slow. The impact of last year’s tax cuts could fade, and interest rates could go back up, but the signs point to the possibility of an impending buyers’ market.”

Here are lists of county data on affordability from the report:

Among the counties that were less affordable than the historical average are:
Los Angeles County, California
Harris County (Houston), Texas
Maricopa County (Phoenix), Arizona
San Diego County, California
Orange County, California.

Among those that were more affordable than they historically have been are:
Cook County (Chicago), Illinois
Miami-Dade County, Florida
Santa Clara (San Jose), California
Middlesex (Boston), Massachusetts
Suffolk County (New York), New York

Counties with the highest affordability were:
Warren County (Allentown), New Jersey
Mercer County (Trenton), New Jersey
Cumberland (Vineland), New Jersey
Onslow (Jacksonville), North Carolina
Litchfield (Torrington), Connecticut

Counties where the average earner spends the highest share of income on a median-priced home:
Kings County (Brooklyn), New York
New York County (Manhattan), New York
Santa Cruz County, California
Marin County, California in the San Francisco metro
Maui County, Hawaii

Counties where the average earner spends the lowest share of income on a median-priced home:
Bibb County (Macon), Georgia
Baltimore City, Maryland
Wayne County (Detroit), Michigan
Rock Island County (Quad Cities), Illinois
Montgomery County, Alabama

 

 

 

 

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