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Median-priced homes aren’t affordable in 74% of U.S. housing markets

61% were less affordable than their historic average

The average wage earner can’t afford a median-priced home in 74% of U.S. markets, according to a new study from ATTOM Data Solutions

According ATTOM’s 2019 U.S. Home Affordability Report, median home prices in the third quarter of 2019 were not affordable for average wage earners in 371 of 498 U.S. counties analyzed.

The largest populated counties where a median-priced home in Q3 of 2019 was not affordable for average wage earners included Los Angeles County, California; Cook County, Illinois; Maricopa County, Arizona; San Diego County, California; and Orange County, California. These are some of the 67% of markets where it requires at least 30% of wages to buy a home.

Meanwhile, there were 127 counties, 26% of the 498 counties analyzed in the report, where a median-priced home in Q3 of 2019 was still affordable for average wage earners. Those counties included Harris County, Texas; Wayne County, Michigan; Philadelphia County, Pennsylvania; Cuyahoga County, Ohio; and Allegany County, Ohio.

The report determined affordability for average wage earners by calculating the amount of income needed to make monthly house payments, including mortgage, property taxes and insurance, on a median-priced home. This is assuming a 3% down payment and a 28% maximum “front-end” debt-to-income ratio, which was then compared to annualized average weekly wage data from the Bureau of Labor Statistics.

“Buying a home continues to be a rough road to navigate for the average wage earner in the United States. Prices are going up substantially faster than earnings in 2019 without any immediate end in sight, which continues to make home ownership difficult or impossible for a majority of single-income households and even for many families with two incomes,” said Todd Teta, chief product officer of ATTOM. 

As Teta said, home prices are continuing to rise.

According to a forecast from CoreLogic, home-price gains will pick up speed in the coming year, with a 5.4% jump in the 12 months following July 2019.

That would be a faster pace than the 3.6% annualized increase seen this July, CoreLogic said. In July, the median price of single-family homes in the U.S. reached to a record high, reaching $266,000 in Q2, up 10.8% from the previous quarter, and up 6.4% from a year ago, ATTOM said. In August, the nation’s home-sale prices rose 2.7% from 2018 levels, rounding out at a median of $312,200.

There were 304 of 498 counties less affordable than their historic affordability averages in Q3 of 2019, down from 70% of counties in the previous quarter and 73% of counties in Q3 of 2018. There were 194 of those counties that were more affordable than their historic affordability averages in Q3 of 2019, including Cook County, Illinois; San Diego County, California; Queens County, New York; King County, Washington; and Santa Clara County, California.

“If there is any silver lining to the picture, it’s that mortgage rates have fallen back to historic lows. That’s softening the blow of rising prices and actually making home ownership a bit more attainable in most areas of the country,” Teta said.

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