Despite wage growth and a decline in mortgage rates, other market factors are more unreachable than ever for many Americans.
According to ATTOM Data Solutions, single-family home prices are moving faster than wages and historic mortgage rates. As a result, a larger percentage of the wages are required to buy a home and affordability has declined in much of the nation.
"In a year when nothing is normal, single-family home ownership has become less affordable for average earners in the US, despite conditions that seem to be pointing in the opposite direction," said Todd Teta, ATTOM's chief product officer, prepared for comments .
"Wages have risen and mortgage rates have fallen to an all-time low," he continued. “Additionally, the American economy has suffered badly since the coronavirus pandemic began – a plight that would normally reduce home demand and lower home prices. But those same low mortgage rates, along with other factors, have drawn many buyers into the market looking for a reduced home listing. The result is that price increases have overcome the effects of wages and mortgage rates. "
Home price appreciation outperformed average weekly wage growth in the third quarter in 425 of the 487 districts analyzed in the report, or 87% of the market. The largest counties include Los Angeles County, CA; Cook County (Chicago), IL; Maricopa County (Phoenix), AZ; and San Diego County, CA.
Average house and condo prices in Q3 2020 are less affordable than the historical average in 63% of counties with enough data to analyze, compared to 54% year over year. Additionally, in 61% of the counties featured in the report, average earners find the cost of housing at average cost prohibitive. "That means these expenses consume more than 28% of the average county-to-county wage across the country," the report said.
Markets where single-family home buyers need the highest annual wage to buy a typical home are in New York County, NY ($ 308,015); San Francisco County, CA ($ 292,474); San Mateo County (outside of San Francisco), CA ($ 289,064); Marin County (outside of San Francisco), CA ($ 284,052) and Santa Clara County (San Jose), CA ($ 251,534).
Of the 487 counties analyzed in the report, 308 (63%) are less affordable in Q3 2020 than their historical averages for affordability, compared to 54% of counties in the previous quarters and Q3 2019.
Among counties with a population of 1 million or more, those where affordability indices have declined the most since Q3 2019 are Philadelphia County, PA (index down 10%); Franklin County (Columbus), OH (minus 8%); Contra Costa County, California (outside of San Francisco) (down 6%); Dallas County, TX (down 6%) and Broward County (Fort Lauderdale), FL (down 6%).