May 26, 2018

Report: 87% of Counties Face Affordability Dip

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Report: 87% of Counties Face Affordability Dip

During the second quarter of this year, median home prices increased at a faster pace than average weekly wages in 87 percent of U.S. counties, according to real estate data firm ATTOM Data Solutions. The firm analyzed a sampling of 464 of the largest counties and found the trend was present in 403 of them.

Least Affordable Cities

The counties where residents would need to spend the highest share of average weekly wages to buy a median-priced home are:

  1. Marin County, Calif. (San Francisco metro area): 126.4%
  2. Kings County, N.Y. (Brooklyn): 125.9%
  3. Santa Cruz County, Calif.: 112.3%
  4. Summit County, Utah (Summit Park metro area): 107.8%
  5. Monroe County, Fla. (Key West metro area): 100.3%

Housing in 210 of the 464 counties—or 45 percent—was deemed less affordable than historic norms; that marks the highest share since 2009, the analysis notes. “While home price appreciation in the second quarter accelerated to the fastest pace in more than three years, wage growth turned negative, posting the biggest year-over-year decrease in five years in Q4 2016—the most recent average weekly wage data available,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “That combination of accelerating home price growth and slowing wage growth, along with mortgage interest rates that are up nearly 50 basis points from a year ago, eroded home affordability nationwide to the lowest level in nearly nine years. It pushed the highest share of markets beyond the threshold of normal affordability in nearly eight years.”

The median U.S. home price was $253,000 in the second quarter, up 7.7 percent from a year ago, according to ATTOM Data Solutions. That is the biggest annual increase since the first quarter of 2014. Meanwhile, the average weekly wage nationwide was $1,067 in the fourth quarter of 2016. That also marks a 1.4 percent decrease from a year ago as well as the largest annual decrease since the fourth quarter of 2011.

The report also found that average wage earners would need to spend more than 43 percent of their income to purchase a median-priced home in 144 of the 464 counties analyzed. That’s the maximum debt-to-income ratio allowed for a “qualified mortgage,” according to Consumer Financial Protection Bureau guidelines.

Source: ATTOM Data Solutions/RealtyTrac