With home prices and mortgage rates climbing, homeownership unaffordability was the reality in 97% of counties across the US in Q2 22.
Lack of Homeownership Affordability in 97% of US Counties in Q2 22
The portion of wages consumed by homeownership costs increased at its fastest pace this century during Q2 22, according to ATTOM’s recently released Q2 22 US Home Affordability Report.
This report indicated that the median price for single-family homes and condos in Q2 22 made homeownership less affordable in 97% of counties across the US. Comparatively, “just” 69% of counties were considered unaffordable during Q2 21. This 97% of counties was also the highest point of unaffordability since 2007.
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31.5% of Wages Now Required to Cover Homeownership Expenses
ATTOM’s Q2 22 Home Affordability Report also indicates that the average wages required for major homeownership expenses across the nation had increased to 31.5% in Q2 22. (The affordability tipping point is considered to be no more than 28% of average local wages.) This increase to 31.5% of average wages needed to cover the costs of a median priced home ($349,000) and an interest rate of +5% for a 30-year fixed-rate mortgage reflected the fastest quarterly and annual pace worsening affordability 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,” said Rick Sharga, executive vice president of market intelligence at ATTOM. “But homes remained relatively affordable due to historically low mortgage rates and rising wages. With current interest rates almost doubling, homebuyers are faced with monthly mortgage payments that are between 40 and 50% higher than they were a year ago – payments that many prospective buyers simply can’t afford.”
Historic Affordability Continues to Decline
Worsening affordability was the reality for average local wage earners in 67% of the 575 counties ATTOM analyzed for its latest Q2 2022 Home Affordability Report.
Median single-family home and condo prices increased at least +10% y/y in 65% (373 counties) of the 575 counties analyzed by ATTOM for this report.
Likewise, annual home price appreciation outpaced weekly wage growth in nearly 90% of the markets ATTOM analyzed for this report. Annual wages of more than $75,000 were needed to cover major homeownership costs on median-priced homes during Q2 22 in 40% of the 575 housing markets analyzed in this report.
The highest annual wages required to afford typical homes were led by markets on both coasts including:
- Ney York County (Manhattan) – $362,691
- San Mateo County (outside San Francisco in Silicon Valley) – $357,567
- Marin County (outside San Francisco over the Golden Gate Bridge) – $ 347,958
- San Francisco County – $327,220
- Santa Clara County (San Jose) – $322,131
The lowest annual wages required to afford typical median-priced homes included:
- Schuylkill County (outside Allentown PA) – $17,595
- Cambria County (outside Pittsburgh) – $20,171
- Mercer County (outside Pittsburgh) – $23,255
- Fayette county (outside Pittsburgh) – $23,638
- Bibb County (Macon GA) – $24,501
Just 3% of Housing Markets More Affordable than Historic Averages
Of the 575 counties included in ATTOM’s Q2 22 Housing Affordability Report, only 15 counties or 3% of counties were more affordable than their historic averages during Q2 2022. This 3% was down from 20% of the same group in Q1 2022, down from 31% in Q2 2021 and down 56% in Q2 2020.
Think Westchester County and New York County (Manhattan) in New York. Also think counties in which homes are more affordable than their historic averages such as…
- Macon County (Decatur) IL
- San Francisco County CA
- Mercer County (outside of Pittsburgh) IL
- Peoria County IL
- Schuylkill County (outside of Allentown) PA
Counties with populations of at least 1M where affordability has declined the least year-over-year include:
- Oakland County (outside Detroit MI) – -11%
- Cook County (Chicago) IL – -13%
- Cuyahoga County (Cleveland) OH – -13%
- Westchester County (outside NYC) NY – -17%
- Bronx County NY – -18%
Thanks to ATTOM.
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