Home affordability is at its lowest level in nearly 9 years
You can’t make a home here.
Median home prices hit their least affordable level since 2008 in the second quarter of this year, according to data released Thursday by real estate data firm ATTOM Data Solutions — rising faster than people’s wages in 87% of the 464 counties measured. Now, in nearly one third of counties across America, the average worker — defined as a worker making the median wage for the city they live in — cannot afford the median home in the county they live in. Across the nation, the median home is now $253,000 and the average wage nationwide is roughly $1,067 a week, but both wages and home prices vary significantly from place to place.
The company analyzed median home prices, as well as average wage data from the government, in 464 U.S. counties with a total population of more than 197 million. To determine affordability, it examined the percentage of their average wages that a person would need to spend to make house payments on a median-priced home, assuming a 3% down payment and a 30-year fixed rate loan. If you have to spend more than 43% of your income on housing costs, this is considered unaffordable.
So why are homes getting more unaffordable? First, home prices have been accelerating rapidly (since bottoming out nationwide in early 2012, median home prices nationwide have increased 69%). Second, our paychecks aren’t keeping pace with that (during that same period, wages increased just 9%). And lastly, mortgage rates have upticked a bit from last year.
In some counties the problem is especially acute. Here are the five most unaffordable places in America — all of which would require the average worker in the city to spend his entire income (and then some) on a house in order to afford one in the area.
- Marin County, California, in the San Francisco metro area
- Kings County (Brooklyn)
- Santa Cruz County, California
- Summit County, Utah (this is where Park City is)
- Monroe County, Florida, in the Key West metro area
It’s no wonder residents of Marin can’t afford a home: In the past year, home prices have gone up more than 8%, according to Zillow, and the median home value is now over $1 million. In Brooklyn, home prices have jumped more than 11% in the past year to more than $715,000.
On the plus side, a handful of counties (roughly 1 in 4) are still very affordable — meaning that the average worker in the area would need to spend less than 25% of his or her income to buy a median priced home. These include Wayne County, Michigan in the Detroit metro area (12.8%); Philadelphia County, Pennsylvania (17.1%); Cuyahoga County, Ohio in the Cleveland metro area (18.4%); Allegheny County, Pennsylvania in the Pittsburgh metro area (22.1%); and Saint Louis County, Missouri (24.9%).
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