Median-priced single-family homes and condos were less affordable in the second quarter compared with historical averages in 97 percent of counties across the country, according to ATTOM’s U.S. Home Affordability Report. That was up from 69 percent of counties that were historically less affordable in the second quarter of 2021, to the highest point since 2007.
The report also shows that the portion of average wages required for major homeownership expenses rose to 31.5 percent as the median price of a single-family home hit a new high of $349,000 and 30-year mortgage rates have shot up above 5 percent. The percentage of average wages consumed by those expenses has risen at the fastest quarterly and annual pace since at least 2000.
“Extraordinarily low levels of homes for sale combined with strong demand have caused home prices to soar over the last few years,” ATTOM Executive Vice President of Market Intelligence Rick Sharga said in a release. “But homes remained relatively affordable due to historically low mortgage rates and rising wages. With interest rates almost doubling, homebuyers are faced with monthly mortgage payments that are between 40 and 50 percent higher than they were a year ago – payments that many prospective buyers simply can’t afford.”
Compared with historical levels, median home prices in 560 of the 575 counties analyzed in the second quarter are less affordable than in the past, according to the ATTOM report. That’s up from 459 in the first quarter, 397 in the second quarter of 2021 and 251, or less than half, two years ago.
Major ownership costs on median-priced single-family homes and condos now require 31.5 percent of the average $67,587 wage; 28 percent and below is considered affordable by common lending standards. The current level of 31.5 percent stands at the highest point since the second quarter of 2007 and is up from 26 percent quarter-over-quarter and 23.9 percent year-over-year. Both increases mark the largest jumps since at least 2000.
Major homeownership expenses on typical homes in the second quarter were unaffordable to average local wage earners in 67 percent of the counties in the ATTOM report. The largest populated counties that are unaffordable are Los Angeles County, Calif.; Maricopa County (Phoenix), Ariz; San Diego County, Calif.; Orange County, Calif. (outside Los Angeles) and Kings County (Brooklyn), N.Y.
The most populous of the counties where major expenses on median-priced homes remained affordable for average local workers were Cook County (Chicago), Ill.; Harris County (Houston), Texas; Philadelphia County, Pa.; Franklin County (Columbus), Ohio, and Hennepin County (Minneapolis), Minn.
Among counties with a population of at least 1 million, the biggest year-over-year gains in median single-family home and condo prices were in Collin County (Plano), Texas (up 28 percent); Hillsborough County (Tampa), Fla. (up 27 percent); Maricopa County (Phoenix), Ariz. (up 25 percent); Clark County (Las Vegas), Nev. (up 24 percent) and Salt Lake County (Salt Lake City), Utah (up 24 percent).
Counties with a population of at least 1 million where median prices went up the least or decreased year-over-year were Oakland County, Mich. (outside Detroit) (down 2 percent); Honolulu County, Hawaii (up 4 percent); Bronx County, N.Y. (up 5 percent); Cook County (Chicago), Ill. (up 5 percent) and Kings County (Brooklyn), N.Y. (up 6 percent).
Major ownership costs on median-priced, single-family homes in the second quarter consumed more than 28 percent of average local wages in 67 percent of the counties analyzed, assuming a 20 percent down payment. That is up from 52 percent in the first quarter and 44 percent year-over-year.
“Worsening affordability appears to be having an impact on demand, which could lead to prices plateauing or even correcting modestly in some markets,” Sharga said. “Many potential buyers may elect to continue renting until market conditions improve. Others might adjust their sights and look for smaller properties, or homes that are further away from major metro areas. And it’s possible that worsening affordability could accelerate the migratory trends that the COVID-19 pandemic started, as residents in high cost, high tax states who can now work from home look for less expensive places to live.”
Counties that required the largest percentage of wages to buy a home in the second quarter were Santa Cruz County, Calif. (116 percent of annualized weekly wages needed to buy a home); Marin County, Calif. (outside San Francisco) (109.6 percent); Kings County (Brooklyn), N.Y. (102.9 percent); Maui County, Hawaii (92 percent) and San Luis Obispo County, Calif. (88.2 percent).
Counties where the smallest portion of average local wages were required to afford the median-priced home were Schuylkill County, Pa. (outside Allentown) (10.2 percent); Rock Island County (Moline), Ill. (12.4 percent); Cambria County, Pa. (outside Pittsburgh) (12.9 percent); Macon County (Decatur), Ill (13.4 percent) and Mercer County, Pa. (outside Pittsburgh) (13.6 percent).
Annual wages of more than $75,000 were needed to pay for major costs on the median-priced home purchased during the second quarter in 40 percent of the markets in the report. The highest annual wages required to afford typical homes were led by New York County (Manhattan), N.Y. ($362,691); San Mateo County (outside San Francisco), Calif. ($357,567); Marin County (outside San Francisco), Calif. ($347,958); San Francisco County, Calif. ($327,220) and Santa Clara County (San Jose), Calif. ($322,131).
The lowest annual wages required to afford a median-priced home were in Schuylkill County, Pa. (outside Allentown) ($17,595); Cambria County, Pa. (outside Pittsburgh) ($20,171); Mercer County, Pa. (outside Pittsburgh) ($23,255); Fayette County, Pa. (outside Pittsburgh) ($23,638) and Bibb County (Macon), Ga. ($24,501).