Real Estate

Median-priced homes remain unaffordable for average earners in most cities

Home prices continue to outpace wages in 40% of markets

Affordability issues continue to plague the nation’s housing market, and it appears the situation is only getting worse.

The latest report from ATTOM Data Solutions shows that the median-priced home is too expensive for the average earner in 74% of U.S. markets. That’s up 3% from last quarter.

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 353 of the 473 counties considered.

That means that median-priced homes in about 20 additional markets were pushed out of reach for the average Joe since last quarter.

“Despite falling mortgage rates and rising wages, the cost of owning the typical home remains out of reach or a significant financial stretch for the nation’s average wage earners,” said Todd Teta, ATTOM’s chief product officer.

“However, a closer look at the data reveals milder-than-usual increases for the spring, and none as severe as in previous years since the recession,” Teta added. “Therefore, this can help indicate the market may be easing, following similar indicators from recent home-flipping and foreclosure data trends.”

ATTOM’s report revealed that home price appreciation has outpaced wage growth in 40% of markets. And, in 67% of markets, average earners have to use more than 30% of their wages to buy a home.

When looking at the historical average, 61% of markets are less affordable.

But perhaps things are not as bad as they seem.

The data also shows that compared with a year ago, 82% of markets are actually more affordable. The standouts include Los Angeles County, California; Cook County, Illinois; Harris County, Texas; Maricopa County, Arizona; and San Diego County, California.

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