According to the latest U.S. Home Affordability Report (from ATTOM Data Solutions), home prices are outpacing wages in 40% of U.S. housing markets and are less affordable that the historic average in 61% of local markets. In addition, they report that that median home prices in Q2 were not affordable for average wage earners in 353 of 480 U.S. counties they analyzed. To come up with their numbers, they determined affordability for average wage earners by calculating the amount of income needed to make monthly house payments (including mortgage, property taxes and insurance) on a median-priced home, assuming a 3% down payment and a 28% maximum “front-end” debt-to-income ratio. Then, that required income was compared to annualized average weekly wage data from the U.S. Bureau of Labor Statistics.
“Despite falling mortgage rates and rising wages, the cost of owning the typical home remains out of reach or a significant financial stretch for the nation’s average wage earners,” said Todd Teta, chief product office with ATTOM Data Solutions. “However, a closer look at the data reveals milder-than-usual increases for the Spring, and none as severe as in previous years since the recession. Therefore, this can help indicate the market may be easing, following similar indicators from recent home-flipping and foreclosure data trends.”