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Historic Affordability Down In Three-Quarters Of U.S. Market

Katie Jensen
Jan 03, 2022

The typical home remains within the means of the average wage earner, but the historic affordability is down in three-quarters of the U.S. market. 

KEY TAKEAWAYS
  • Median-priced single family homes are less affordable in the fourth quarter compared to historical averages in 77% of counties across the nation.
  • Compared to historic levels, median home prices in 440 of the 575 counties analyzed in the fourth quarter of 2021 are less affordable than past averages.
  • The report concludes that major monthly homeownership costs remain within the financial means of the average wage workers across the nation in the fourth quarter this year.
  • However, the percentage of counties where affordability is worse than historical averages has hit another high point since the third quarter of 2008. 

ATTOM’s fourth-quarter 2021 U.S. Home Affordability Report shows that the typical home remains within the means of the average wage earner, but the historic affordability is down in three-quarters of the U.S. market. 

Median priced single family homes are less affordable in the fourth quarter compared to historical averages in 77% of counties across the nation. That is up just 39% of counties that were historically less affordable in the fourth quarter in 2020, to the highest point in 13 years, as home prices continue rising faster than wages throughout much of the country. 

The report also determined the amount of income needed to meet major monthly home ownership expenses – including mortgage, property taxes and insurance – on a median priced single family home, assuming a 20% down payment and a 28% maximum "front-end" debt-to-income ratio. The required income was compared to annualized average weekly wage data from the Bureau of Labor Statistics.

Compared to historic levels, median home prices in 440 of the 575 counties analyzed in the fourth quarter of 2021 are less affordable than past averages. This figure has been increasing as the median national home price has shot up 17% over the past year to a record high of $317,500.

The report concludes that major monthly homeownership costs remain within the financial means of the average wage workers across the nation in the fourth quarter this year. However, the percentage of counties where affordability is worse than historical averages has hit another high point since the third quarter of 2008. 

"The average wage earner can still afford the typical home across the United States, but the financial comfort zone continues shrinking as home prices keep soaring and mortgage rates tick upward," said Todd Teta, chief product officer with ATTOM. "Historically low rates and rising wages are still big reasons why workers can meet or come very close to standard lending benchmarks in a majority of counties we analyze. But the portion of wages required for major ownership expenses nationwide is getting closer to levels where banks become less likely to offer home loans. Amid very uncertain times, with the pandemic again threatening the economy, we will keep watching this key measure of housing market stability."

Major ownership costs on median-priced homes in the fourth quarter of 2021 consume less than 28% of average local wages in 296 of the 575 counties analyzed in this report (51%), assuming a 20% down payment. That was about the same as in the third quarter of 2021 for the same group of counties, but down from about two-thirds in the fourth quarter of last year.  

Annual wages of more than $75,000 are needed to afford major costs on the median-priced home purchased during the fourth quarter of 2021 in just 114, or 20%, of the 575 markets in the report.

The top 30 highest annual wages required to afford typical homes are all on the east or west coasts, led by New York County (Manhattan), NY ($274,679); San Mateo County (outside San Francisco), CA ($252,589); San Francisco County, CA ($251,054); Santa Clara County (San Jose), CA ($229,301) and Marin County (outside San Francisco), CA ($223,713).

The lowest annual wages required to afford a median-priced home in the fourth quarter of 2021 are in Schuylkill County, PA (outside Allentown) ($10,927); Bibb County (Macon), GA ($16,483); Cambria County, PA (outside Pittsburgh) ($17,784); Macon County (Decatur), IL ($19,317) and Blair County (Altoona), PA ($20,363).

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