Home affordability hasn’t been this bad since 2008

by Steve Randall20 Dec 2018

As 2018 comes to a close, affordability of US homes is worse than it’s been since the third quarter of 2008.

ATTOM Data Solutions analyzed the US median home price in the fourth quarter of 2018 and calculated affordability based on the share of income needed to buy a median-priced home. Markets with an index score below 100 are less affordable than the historic average and those scoring above 100 are more affordable.

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.

And out of 469 counties analyzed, 357 – or 76% - had a score below 100.

"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."

Where affordability improved in Q4
Despite the high share of counties scoring below 100, affordability did improve in 58% of markets in the last three months.

Cook County (Chicago), Illinois; Harris County (Houston), Texas; San Diego County, California; Orange County, California; and Miami-Dade County, Florida, were among the improving markets.

Nationwide the median home sales price in Q4 2018 was $241,250, up 9% year-over-year; while the annualized average weekly wage of $56,381 was up 3% from a year ago.

Where you need income of $100K or more
With 3% down payment and a maximum front-end debt-to-income ratio of 28%, a median-priced home would require an income of at least $100,000 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).

 


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