Home affordability as measured by ATTOM Data Solutions has fallen to levels not seen since 2008, the company reported Thursday.
The U.S. median home price in the fourth quarter was at the least affordable level since Q3 2008 — a more than 10-year low. Nationwide, the Q4 2018 home affordability index of 91 was down from an index of 94 in the previous quarter and an index of 106 in Q4 2017 to the lowest level since Q3 2008, when the index was 87.
Among 469 U.S. counties analyzed in the report, 357 (76%) posted a Q4 2018 affordability index below 100, meaning homes were less affordable than the long-term affordability averages for the county. That was down from a 10-year high of 78% of counties posting an affordability index below 100 in Q3 2018.
"While poor home affordability continues to cloud the U.S. housing market, there are silver linings in the local data as home price appreciation falls more in line with wage growth," said Daren Blomquist, senior vice president at ATTOM Data Solutions. "Affordability improved from the previous quarter in more than half of all local markets, and one in five local markets saw annual wage growth outpace annual home price appreciation, including high-priced areas such as San Diego, Brooklyn and Seattle."
Counter to the national trend, home affordability improved from the previous quarter in 272 of the 469 counties analyzed in the report (58%), including Cook County (Chicago), Illinois; Harris County (Houston), Texas; San Diego County, California; Orange County, California; and Miami-Dade County, Florida.
Home affordability worsened compared to the previous quarter in 197 of the 469 counties analyzed in the report (42%), including Los Angeles County, California; Maricopa County (Phoenix), Arizona; Riverside County, California; San Bernardino County, California; and Clark County (Las Vegas), Nevada.
Nationwide the median home sales price in Q4 2018 was $241,250, up 9% from a year ago, while the annualized average weekly wage of $56,381 was up 3% from a year ago.
Annual home price appreciation in Q4 2018 outpaced annual average wage growth in 366 of the 469 counties analyzed in the report (78%), including Los Angeles County, California; Cook County (Chicago), Illinois; Harris County (Houston), Texas; Maricopa County (Phoenix), Arizona; and Orange County, California.
Counter to the national trend, annual average wage growth outpaced annual home price appreciation in 103 of the 469 counties analyzed in the report (22%), including San Diego County, California; Kings County (Brooklyn), New York; King County (Seattle), Washington; Santa Clara County (San Jose), California; and New York County (Manhattan), New York.
Nationwide, buying a median-priced home in Q4 2018 would require 35.0% of an average wage earner's income, above the historical average of 32.0%.
Counties with the highest share of wages needed to buy a median priced home in Q4 2018 were Kings County (Brooklyn), New York (128.8%); Marin County, California (124.1%); Santa Cruz County, California (118.2%); Monterey County, California (96.9%); and San Luis Obispo County, California (94.4%).
Counties with the lowest share of wages needed to buy a median-priced home in Q4 2018 were Baltimore City, Maryland (13.1%); Bibb County (Macon), Georgia (13.5%); Clayton County, Georgia (15.5%); Peoria County, Illinois (15.7%); and Wayne County (Detroit), Michigan (15.9%).
Buying a median-priced home required more than $100,000 in annual income (assuming 3% down and a maximum front-end debt-to-income ratio of 28%) in 70 of the 469 counties analyzed in the report, led by New York County (Manhattan), New York ($408,977 to buy); San Francisco County, California ($375,491 to buy); San Mateo County, California ($368,242 to buy); Marin County, California ($315,524 to buy); and Santa Clara County (San Jose), California ($308,178 to buy).
