ATTOM Data Solutions’ 2020 U.S. Home Affordability Report shows that a mix of factors is causing homeownership to become unaffordable for most Americans.
Mostly, ATTOM’s report said it boils down to average wages remaining stagnant while the median home price rose 10 percent during the fourth quarter of 2020.
Single-family homes and condos were less affordable than historical averages in 275 of the 499 counties analyzed, 55 percent. That number is up from 217 of the same group in the fourth quarter of 2019 and an even greater increase from 164 in 2017.
Major homeownership expenses made up 29.6 percent of the average wage across the nation during the fourth quarter. That is up from 26.4 percent from the year before. Lenders prefer that number be at 28 percent. Of the counties analyzed, 59 percent had an average percentage higher than 28.
“Owning a home in the United States slipped into the unaffordable zone for average workers across the nation in the fourth quarter as the numbers continued a year-long slide in the wrong direction. The latest housing market data shows the average worker unable to meet the 28 percent affordability guideline used by lenders,” said Todd Teta, ATTOM’s chief product officer.
Home price appreciation outpaced average weekly wage growth in the fourth quarter of 2020 in 460 of the 499 counties analyzed in the report. In 124 counties, the average wages needed to afford the median-priced home was over $75,000.
“The future remains wholly uncertain and affordability could swing back into positive territory. But for now, things are going in the wrong direction for buyers,” Teta said.
The largest counties analyzed that did not rise above that 28 percent benchmark were Cook County, Ill.; Harris County, Texas; Philadelphia County, Pa.; Hillsborough County, Fla. and Cuyahoga County, Ohio.