Number of affordable places to live drops to lowest point in two years
More than 3 in 5 counties studied in a recent home affordability report were deemed less affordable than their historical averages, representing a steep uptick in the second quarter of the year.
This share of counties hovering in less affordable territory was the highest seen in the last two years, an observation that comes as home price growth continues to outpace wage increases in many metros throughout the country, the ATTOM Data Solutions report said.
The 61 percent of counties whose affordability slipped in the second quarter was higher than the 48 percent ATTOM reported in the same period last year.
Nationwide, the cost of homeownership has risen to its highest level since 2008, the report says. Major costs of a typical home took up more than 25 percent of the average national wage in the second quarter of this year. Last year, that number was closer to 22 percent.
ATTOM’s report points out that this remains within the standard lenders tend to follow. If no more than 28 percent of a household’s income is taken up by mortgage payments, home insurance and property taxes, lenders tend not to lose sleep.
In nearly three-quarters of counties studied, the growth in home prices over the past year outstripped the annual growth in wages, according to the report’s analysis of data from the U.S. Bureau of Labor Statistics.
Driving this decline in affordability were the major counties that include the cities of Los Angeles, Houston, Phoenix and San Diego, among others.
Some places saw wages grow faster than home prices. Chicago, Brooklyn, San Antonio and Detroit were among them, the report said.
The report gauges affordability by analyzing median-priced single-family homes. It assumes a 20 percent down payment. For buyers who put less money down, monthly mortgage costs would be higher.