America's housing market is booming with home prices nationwide now back to where they were a decade ago, just before the financial crisis
Average wage earners cannot afford a median priced home in 74% of 480 counties across the US.
The analysis of home affordability in the second quarter of 2019 by ATTOM Data Solutions shows that things are worsening in 40% of markets where median home prices are growing faster than wages.
"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."
The worst markets for affordability
The Q2 2019 US Home Affordability Report also reveals that 67% of markets analyzed require at least 30% of potential buyers’ annualized weekly wages to buy a home.
The worst markets for affordability were Marin County (San Francisco), California (116.8% of annualized weekly wages needed to buy a home); Kings County, New York (113.4%); Santa Cruz County, California (112.3%); San Luis Obispo County, California (91.4%); and Maui County, Hawaii (88.2%).
Meanwhile, of the 480 counties analyzed 39% were more affordable than their historic affordability averages in the second quarter of 2019, including Cook County (Chicago), Illinois; and New York County, Suffolk County, Bronx and Nassau County – all in the New York metro area.
The report 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. That required income was then compared to annualized average weekly wage data from the Bureau of Labor Statistics.