HOME AFFORDABILITY IMPROVES SLIGHTLY DURING FIRST QUARTER BUT REMAINS DIFFICULT FOR AVERAGE WORKERS
Major Home-Ownership Expenses Require Smaller Portion of Wages for Second-Straight Quarter; Historical Affordability Also Inches Upward; But Both Measures Remain Near Worst Levels in 15 Years as Home Prices Stay Close to All-Time Highs ATTOM, a leading curator of land, property, and real estate data, released its first-quarter 2024 U.S. Home Affordability Report showing that median-priced single-family homes and condos remain less affordable in the first quarter of 2024 compared to historical averages in more than 95 percent of counties around the nation with enough data to analyze. The latest trend continues a pattern, dating back to 2022, of home ownership requiring historically large portions of wages around the country. The report also shows that major expenses on median-priced homes consume 32.3 percent of the average national wage in the first quarter, several points above common lending guidelines. Both measures represent slight quarterly improvements but remain worse than a year ago and still sit at levels that have worked against home buyers for three years. That scenario has continued as increases in home values and major home-ownership expenses have outpaced gains in wages, despite a small respite from the second half of last year into the first quarter of 2024. As a result, the portion of average wages nationwide required for typical mortgage payments, property taxes and insurance remains up almost three percentage points from a year ago and 11 points from early in 2021, right before home-mortgage rates began shooting up from their lowest levels in decades. The latest expense-to-wage ratio continues to sit above the 28 percent level preferred by mortgage lenders and marks one the highest points over the past decade. “The picture for home buyers is brightening a little again as affordability measures have improved for the second quarter in a row,” said Rob Barber, CEO for ATTOM. “For sure, it’s not like things are coming up roses for house hunters. Affording a home remains a financial stretch, or a pipe dream, for so many households. But with mortgage rates coming down and home prices growing only by modest amounts, it’s gotten a bit easier for average wage earners to afford a home so far this year. The upcoming Spring buying season will say a lot about whether home prices remain stable enough for this trend to continue.” The first-quarter patterns come as the national median home price has risen less than 2 percent this quarter from the previous quarter and is still down from peaks hit last year. Further aiding buyers are mortgage rates that have dipped back down below 7 percent for a 30-year fixed loan after rising close to 8 percent in 2023. Inflation, while still running close to 4 percent, is less than half the levels hit in 2021. Those factors have helped reduce home ownership expenses following a period when they were shooting up faster than wages. The report determined affordability for average wage earners by calculating the amount of income needed to meet major monthly home ownership expenses — including mortgage payments, property taxes and insurance — on a median-priced single-family home, assuming a 20 percent down payment and a 28 percent maximum “front-end” debt-to-income ratio. That required income was then compared to annualized average weekly wage data from the U.S. Bureau of Labor Statistics. Compared to historical levels, median home ownership costs in 577 of the 590 counties analyzed in the first quarter of 2024 are less affordable than in the past. That number is down slightly from 584 of the same counties in the fourth quarter of last year but up from 549 in the first quarter of last year, and more than 10 times the figure from early 2021. Meanwhile, the portion of average local wages consumed by major home-ownership expenses on typical homes is considered unaffordable during the first quarter of 2024 in 425, or 72 percent, of the 590 counties in the report, based on the 28 percent guideline. Counties with the largest populations that are unaffordable in the first quarter are Los Angeles County, CA; Maricopa County (Phoenix), AZ; San Diego County, CA; Orange County, CA (outside Los Angeles) and Miami-Dade County, FL. The most populous of the 165 counties where major expenses on median-priced homes are still affordable for average local workers in the first quarter of 2024 are Cook County (Chicago), IL; Harris County (Houston), TX; Wayne County (Detroit), MI; Philadelphia County, PA, and Oakland County, MI (outside Detroit). View Q1 2024 U.S. Home Affordability Heat Map National median home price up quarterly but still down annually, with declines throughout nation The national median price for single-family homes and condos has grown to $336,250 in the first quarter of 2024, just $9,000 less than the all-time high of $345,000 hit several times in the past two years. The latest figure is up 1.9 percent from $330,000 in the fourth quarter of 2023 and up 5.1 percent from $319,900 in the first quarter of last year. Data was analyzed for counties with a population of at least 100,000 and at least 50 single-family home and condo sales in the first quarter of 2024. Among the 46 counties in the report with a population of at least 1 million, the biggest year-over-year increases in median prices during the first quarter of 2024 are in Orange County, CA (outside Los Angeles) (up 14.6 percent); Santa Clara County (San Jose), CA (up 10.3 percent); Palm Beach County (West Palm Beach), FL (up 9.9 percent); Nassau County, NY (outside New York City) (up 8.9 percent) and Miami-Dade County, FL (up 8.7 percent). Counties with a population of at least 1 million where median prices remain down the most from the first quarter of 2023 to the same period this year are Travis County (Austin), TX (down 8.1 percent); New York County (Manhattan), NY (down 7.9 percent); Bexar County (San Antonio), TX (down 3.8 percent); Tarrant County (Forth Worth), TX (down 3.2 percent) and Alameda County (Oakland), CA (down 2.5 percent). Prices growing faster than wages in half the U.S. With home values mostly up annually throughout the U.S., year-over-year price changes are outpacing changes in weekly annualized wages during the early months of 2024 in 358, or 60.7 percent, of the counties analyzed in the report. The current group of counties where prices are increasing more than wages annually, or decreasing
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