Median-priced single-family homes and condos remained less affordable in the third quarter than historical averages in 99 percent of the counties analyzed by ATTOM. That’s far above the 69 percent of counties that were historically less affordable in the third quarter of 2021.
However, ATTOM’s third-quarter U.S. Home Affordability Report also shows potential relief for homebuyers as the portion of average wages nationwide necessary for median major homeownership expenses dipped slightly from 30.9 percent in the second quarter to 30 percent in the third quarter.
“Homeownership remains largely unaffordable for the majority of homebuyers in the majority of markets across the country,” ATTOM Executive Vice President of Market Intelligence Rick Sharga said in a release. “While home prices have declined a bit quarter-over-quarter, they’re still higher than they were a year ago, and interest rates have essentially doubled. Many prospective homebuyers simply can’t afford the home they hoped to buy, and in many cases no longer qualify for the mortgage they’d need.”
The decline in the portion of wages needed to afford the typical home nationwide marks the first quarterly improvement in almost two years and comes as the median national single-family home price has taken a rare third-quarter fall. The latest median value of $340,000 is down 3 percent from the second quarter of 2022.
Compared with historical levels, median home prices in 574 of the 581 counties analyzed by ATTOM in the third quarter are less affordable than in the past. The latest number is up from 568 in the second quarter, 398 in the third quarter of 2021 and 284 two years ago.
Major homeownership expenses on typical homes in the third quarter were still unaffordable to average local wage earners in 69 percent counties in the report. Counties with the largest populations that were unaffordable were Los Angeles County, Calif., Maricopa County (Phoenix), Ariz., San Diego County, Calif., Orange County (outside Los Angeles), Calif. and Kings County (Brooklyn), N.Y.
Median single-family home and condo prices were up by at least 10 percent over the third quarter of 2021 in half (52 percent) of counties included in the report. However, typical values have dropped from the second to the third quarter in 40 percent of those counties, which has contributed to the nationwide decrease.
“Home price appreciation has slowed dramatically in most markets – and there are even price corrections in some areas – as home sales have declined significantly over the past few months,” Sharga said. “But mortgage rates have risen more rapidly and dramatically than they have in several decades, and as a result a monthly mortgage payment today is 35 percent-45 percent higher than a year ago, making affordability too much of a challenge for many would-be buyers.”
The biggest year-over-year gains in median sales prices in counties with a population of at least 1 million in the third quarter were in in St. Louis County, Mo. (up 37 percent), Collin County (Plano), Texas (up 25 percent), Hillsborough County (Tampa), Fla. (up 24 percent), Palm Beach County (West Palm Beach), Fla. (up 21 percent), and Tarrant County (Fort Worth), Texas (up 19 percent).
Counties with a population of at least 1 million where median prices have stayed the same or went up year-over-year were Philadelphia County, Pa. (no change), Honolulu County, Hawaii (up 1 percent), Alameda County (Oakland), Calif. (up 1 percent), Contra Costa County, Calif. (outside Oakland) (up 2 percent) and Cook County (Chicago), Ill. (up 2 percent).
Counties with a population of at least 1 million where median prices dropped most from the second to third quarter were Alameda County (Oakland), Calif. (down 11 percent, Travis County (Austin), Texas (down 9 percent), Santa Clara County (San Jose), Calif. (down 8 percent), Contra Costa County (outside Oakland), Calif. (down 7 percent) and Fairfax County (outside Washington, D.C.), Va. (down 7 percent).
Annual home-price appreciation has been greater than weekly annualized wage growth in the third quarter in 84 percent of the counties in the report, with the largest including Los Angeles County, Calif., Harris County (Houston), Texas, Maricopa County (Phoenix), Ariz., San Diego County, Calif., and Orange County (outside Los Angeles), Calif.
Average annualized wage growth has surpassed home-price appreciation in only 17 percent of the counties analyzed. The largest of those counties include Cook County, (Chicago), Ill., King County (Seattle), Wash., Santa Clara County (San Jose), Calif., Alameda County (Oakland), Calif., and Philadelphia County, Pa.
The portion of average local wages consumed by major ownership costs on median-priced, single-family homes decreased from the second to the third quarter in 45 percent of the counties analyzed. Counties that require the largest percentage of wages are Kings County (Brooklyn), N.Y. (106.1 percent of annualized weekly wages needed to buy a single-family home), Santa Cruz County, Calif. (98.9 percent), Marin County (outside San Francisco), Calif. (96.1 percent), Napa County, Calif. (86.4 percent) and Monterey County, Calif. (84.5 percent).
Counties where the smallest portion of average local wages are required to afford the median-priced home were Schuylkill County (outside Allentown), Pa. (10.5 percent), Peoria County, Ill. (13.4 percent), Bibb County (Macon), Ga. (14 percent), Macon County (Decatur), Ill. (14.1 percent) and Rock Island County (Moline), Ill. (14.1 percent).
Among the counties analyzed, 99 percent were less affordable in the third quarter of 2022 than their historic affordability averages. Counties with a population of at least 1 million that are less affordable than their historic averages (indexes of less than 100 are considered less affordable compared to historic averages) include Wayne County (Detroit), Mich. (index of 60), Hillsborough County (Tampa), Fla. (60), Tarrant County (Fort Worth), Texas (61), Maricopa County (Phoenix), Ariz. (61) and Collin County (Plano), Texas (61).
Counties with the worst affordability indexes in the third quarter were Clayton County (outside Atlanta), Ga. (index of 47), Newton County (outside Atlanta), Ga. (49), Rutherford County (outside Nashville), Tenn. (49), Canyon County (outside Boise), Idaho (51) and Muskegon County (outside Grand Rapids), Mich. (52).
Only 1 percent of the markets analyzed were more affordable than their historic averages, down from 31 percent a year ago and 51 percent in the third quarter of 2020.
The only county with a population of at least 1 million that is more affordable than historic averages is New York County (Manhattan), N.Y. (index of 105).
Counties with the best affordability indexes in the third quarter include San Francisco County, Calif. (index of 125), Macon County (Decatur), Ill. (122), Peoria County, Ill. (111), Schuylkill County (outside Allentown), Pa. (108) and San Mateo County (outside San Francisco), Calif. (106).