Median-priced single-family homes were less affordable in the first quarter compared with historical averages in 79 percent of counties with enough data to analyze, according to ATTOM’s first quarter 2022 U.S. Home Affordability Report. That was up from just 38 percent in the first quarter of 2021, to the highest point since mid-2008.
“It’s certainly no surprise that affordability is more challenging today for prospective homebuyers than it was a year ago,” ATTOM Executive Vice President of Market Intelligence Rick Sharga said in a release. “Historically low mortgage rates and higher wages helped offset rising home prices over the past few years, but as home prices continue to soar and interest rates approach 5 percent on a 30-year fixed rate loan, more consumers are going to struggle to find a property they can comfortably afford.”
Compared with historical levels, median home prices in 461 of the 586 counties analyzed in the first quarter were less affordable than in the past. That’s up from 449 in the fourth quarter and 224 a year ago. That increase continued as the median national home price spiked 16 percent year-over-year to a record high of $320,000, while average wages rose just 7 percent.
Major ownership costs on median-priced homes did remain within the financial means of average workers in the first quarter, consuming 26.3 percent of the $66,560 average national wage, the highest since the third quarter of 2008. It was up from 24.9 percent in the fourth quarter and 21.8 a year ago – the largest annual increase since at least 2005.
Median single-family home prices in the first quarter were up by at least 10 percent year-over-year in 63 percent of the counties included in the report. Among the counties with a population of at least 1 million, the biggest year-over-year gains in median prices were in St. Louis County, Mo. (up 40 percent), Wake County (Raleigh), N.C. (up 29 percent), Maricopa County (Phoenix), Ariz. (up 28 percent), Collin County (Plano), Texas (up 27 percent), and Clark County (Las Vegas), Nev. (up 26 percent).
Counties of at least 1 million where median prices went up the least year-over-year were Westchester County (outside New York City), N.Y. (up less than 1 percent), Montgomery County (outside Washington, D.C.), Md. (up 1 percent), Cook County (Chicago), Ill. (up 2 percent), Kings County (Brooklyn), N.Y. (up 4 percent), and Fairfax County (outside Washington, D.C.) Va. (up 5 percent.)
Major ownership costs on median-priced, single-family homes in the first quarter consumed less than 28 percent of average local wages in just under half (48 percent) of counties analyzed, assuming a 20 percent down payment. That was down slightly from 52 percent in the fourth quarter but well under 66 percent in the first quarter of last year.
“The good news is that in almost half the counties we reviewed, homeownership costs remained below 28 percent for households with average income,” Sharga said. “But the ‘x-factor’ is what impact 8 percent inflation rates will have on these households and their ability to meet their financial obligations. Rising food and energy prices could be a hidden factor that makes affordability even more of a challenge for homebuyers and makes it more difficult to make ends meet for current homeowners.”
Counties where the smallest portion of average local wages was required to afford the median-priced home during the first quarter were Schuylkill County (outside Allentown), Pa. (7 percent), Macon County (Decatur), Ill. (9.7 percent), Peoria County, Ill. (10.2 percent), Bibb County (Macon), Ga. (10.2 percent), and Rock Island County (Moline), Ill. (11 percent).
Counties with a population of at least 1 million where major homeownership expenses typically consumed less than 28 percent of average local wages in the first quarter included Wayne County (Detroit), Mich. (11.9 percent), Allegheny County (Pittsburgh), Pa. (14.2 percent), Cuyahoga County (Cleveland), Ohio (15.1 percent), Philadelphia County, Pa. (16 percent), and Cook County (Chicago), Ill. (20.6 percent).
More than half of the counties in the report (52 percent) required more than 28 percent of annualized local weekly wages to afford a typical home in the first quarter. Counties that required the greatest percentage of wages were Santa Cruz County, Calif. (92.7 percent), Kings County (Brooklyn), N.Y. (91.5 percent), Marin County (outside San Francisco), Calif. (79.7 percent), Maui County, Hawaii (74.8 percent), and San Luis Obispo County, Calif. (73.7 percent).
The top highest annual wages required to afford typical homes were on the coasts, led by New York County (Manhattan), N.Y. ($329,747), San Mateo County (outside San Francisco), Calif. ($286,976), Santa Clara County (San Jose), Calif. ($266,934), San Francisco County, Calif. ($264,038), and Marin County (outside San Francisco), Calif. ($250,106).
The lowest annual wages required to afford a median-priced home were in Schuylkill County (outside Allentown), Pa. ($12,011), Cambria County (outside Pittsburgh), Pa. ($17,129), Bibb County (Macon), Ga. ($18,027), Fayette County (south of Pittsburgh), Pa. ($18,583), and Blair County (Altoona), Pa. ($19,221).
Among the 586 counties in the report, only 125 (21 percent) were more affordable than their historic affordability averages in the first quarter of 2022. That was down slightly from 23 percent of the same group in the prior quarter but was just a third of the 62 percent level in the first quarter of last year.
Counties with a population of at least 1 million that were more affordable than their historic averages included Westchester County (outside New York City), N.Y. (index of 125), Montgomery County (outside Washington, D.C.), Md. (119), Cook County (Chicago), Ill. (112), New York County (Manhattan), N.Y. (110) and Fairfax County, (outside Washington, D.C.), Va. (106).
Counties with the best affordability indexes in the first quarter included Macon County (Decatur), Ill. (index of 180), Kings County (south of Fresno), Calif. (156), Schuylkill County (outside Allentown), Pa. (152), Peoria County, Ill. (148) and San Francisco County, Calif. (142).