The Federal Reserve Bank of Atlanta is concerned about shrinking affordability due to steep increases in home price growth.
Higher Home Prices Most Significant Hurdle to Median-Income Households
National home ownership affordability dropped -11.1% this summer, the sharpest decline in affordability since 2013. With year-over-year home price growth hitting +18% in September 2021, according to CoreLogic’s latest Home Price Insights report, a median-income household would need to spend 32.1% of its earnings to own a median-priced US home. This is the highest cost of homeownership since 2008.
The Federal Reserve Bank of Atlanta says that the most significant hurdle to homeownership in this country for median-income households is higher home prices. The Fed in Atlanta believes that higher home prices have essentially negated any benefits consumers have gleaned from low interest rates and slight wage growth.
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Home Ownership Affordability Monitor (HOAM) Index Down
The Atlantic’s Fed Home Ownership Affordability Monitor (HOAM) has fallen to its lowest level, -11.1, since 2008. With a three-month moving average median existing home sales price tag of $342,350 , according to CoreLogic, increasing, the median income US household would have to spend above the 30% affordability threshold recommended by the Department of Housing and Urban Development (HUD).
West Coast Stands Out as Least Affordable Metro Divisions
Take a look at the least affordable metros, according to the Atlanta Fed’s HOAM:
- San Francisco-Oakland-Hayward – 49.5
- Los Angeles- Long Beach-Anaheim – 53.3
- San Jose-Sunnyvale-Santa Clara – 53.7
- San Diego-Carlsbad – 62.4
- Oxnard-Thousand Oaks-Ventura – 65.0
- Stockton-Lodi – 74.3
- Sacramento-Roseville-Arden-Arcata – 74.5
- Spokane-Spokane Valley WA – 75.1
- Seattle-Tacoma-Bellevue – 76.2
- New York-Newark-Jersey City – 76.4
Midwest Stands Out as the Most Affordable Metro Divisions
Take a look at the most affordable metros, according to the Atlanta Fed’s HOAM:
- Youngstown-Warren-Boardman OH/PA – 156.9
- Louis MO/IL – 150.7
- Harrisburg-Carlisle PA – 146.5
- Des Moines-West Des Moine IA – 141.6
- Cincinnati OH/KY/IN – 141.6
- Toledo OH – 140.1
- Scranton-Wilkes-Barre-Hazleton PA – 139.9
- Little Rock-North Little Rock-Conway AR – 139.2
- Baton Rouge LA – 137.3
- Oklahoma City OK – 135.8
Thanks to the Federal Reserve Bank of Atlanta.
