U.S. housing affordability is at an 8-year low

The gap between housing costs and wages continues to grow in the U.S. While the national median home price has increased 60 percent since the beginning of 2012, average weekly paychecks have swelled by just 1 percent. Combined with this year’s rising property values and shrinking inventory of homes, home affordability in the U.S. is at its lowest levels since the 2008 financial crisis, according to a new analysis from national property database ATTOM Data Solutions, which compared home prices and wage data for 447 U.S. counties.

Just a year ago, 13 percent of U.S. counties were falling behind in housing affordability compared to historic averages. Now, the figure is at 29 percent. And in 81 percent of the counties studied, home prices increased more than pay checks.

The report highlighted Tennessee’s Cumberland County, Michigan’s Genesee County, and Colorado’s Denver County as areas with least affordability compared to historic norms. Meanwhile, New York County, Dallas County, and Bay Area’s Alameda New York, Dallas, and San Francisco were the major metros with the least affordability compared to historic averages.

“Rapid home price appreciation and tepid wage growth have combined to erode home affordability during this housing recovery, and the recent uptick in mortgage rates only accelerated that trend in the fourth quarter,” said Daren Blomquist, senior vice president at ATTOM Data Solutions.

“The prospect of further interest rate hikes in 2017 will likely cause further deterioration of home affordability next year. Absent a strong resurgence in wage growth, that will put downward pressure on home price appreciation in many local markets.”

 

Barbara Eldredge
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