ATTOM, the real estate consultancy, released its Second Quarter US Home Affordability Report for 2021, showing that single-family homes and condos are less affordable in the second quarter of 2022 compared to historical averages. That was an increase of 69% from counties that were historically less affordable in the second quarter of 2021, to the highest point from 2007.
The report also shows that the portion of the average wage nationwide required for major homeownership expenses has increased this quarter to 31.5%, as the median price of a single-family home has reached a new high of $349, and mortgage rates to 30 years have shot up above the 5%. The percentage of the average salary consumed by these expenses has increased at the fastest quarterly and annual rate since at least 2000.
“Extraordinarily low levels of homes for sale combined with strong demand have caused home prices to skyrocket in recent years,” said Rick Sharga, executive vice president of market intelligence at ATTOM. “But homes remained relatively affordable. due to historically low mortgage rates and rising wages. With interest rates nearly doubling, homebuyers face monthly mortgage payments that are between 40 and 40% higher than a year ago, payments that many potential buyers simply cannot pay”.
The report determined affordability for median earners by calculating the amount of income needed to cover major monthly homeownership expenses, including mortgage, property taxes, and insurance, on a median-priced single-family home, assuming a initial payment of 20% and an initial payment of 28%, maximum percentage of the front-end debt-income ratio.
Compared to historical levels, median home prices in 560 of the 575 counties analyzed in the second quarter of 2022 are less affordable than in the past. The most recent number is higher than 397 in the same group of counties in the first quarter of 2022, 397 in the second trimester of 2021 and only 349, or less than half, two years ago. That increase has continued as the national median home price increased by % over the past year, while average annual wages across the country rose just 6%, the ATTOM report notes.
The top costs of owning single-family homes and median priced condos in the US now require more than 23% of average salary of $ 31,587 in the US, a limit considered affordable by common credit standards. The current level of the 31.5% stands at the highest point since the second trimester of 2007 and exceeds 26% of the first quarter of 2022 and the 23.9% from the second quarter of last year. Both magnifications mark the largest jumps since at least 2000.
According to ATTOM analysis, paying for a home across the country has become significantly more difficult in recent months at a time when the US housing market has soared for the eleventh year in a row, but it also faces notable headwinds that could slow it down.
As mortgage rates have risen steadily this year from just over 3% to close to 6% for a loan to 30 years, costs increased for buyers. Higher interest rates, surging inflation, rising fuel costs and a declining stock market threaten the housing market, which may already be showing signs of strain: May marked the fifth consecutive month of higher existing home sales. lower than the previous month.
As historical affordability continues to decline, the main expenses of typical home ownership are now unaffordable for average local wage earners during the second quarter of 2022 at 388, or the 67%, of the 575 counties considered in the report. The most populous counties that are not affordable are Los Angeles County, CA; Maricopa County (Phoenix), AZ; San Diego County, California; Orange County, CA (outside Los Angeles) and Kings County (Brooklyn), NY.
The most populous of the 187 counties where the top spending on median-priced housing remains affordable to the average local worker in the second quarter of 2022 are Cook County ( Chicago ), IL; Harris County (Houston), Texas; Philadelphia County, Pennsylvania; Franklin County ( Columbus ), OH, and Hennepin County ( Minneapolis ), MN.
For the Q2 US Housing Affordability Heat Map of 2022, enter here.
You may also be interested in:
– Best and worst locations in the United States for first-time homebuyers in 2022
– Due to high prices and mortgage rates the housing affordability falls to a minimum of years in USA
– Median home rental price in the US hits new high of $1,849 per month in May, 23.6 % more than before the pandemic