Home Affordability Improves For Average U.S. Wage Earners To Best Level In Over Two Years

IRVINE, Calif., March 26, 2020 /PRNewswire/ -- ATTOM Data Solutions, curator of the nation's premier property database and first property data provider of Data-as-a-Service (DaaS), today released its first-quarter 2020 U.S. Home Affordability Report, which shows that median home prices in the first quarter of 2020 are unaffordable for average wage earners in 319 of 483, or 66 percent of the U.S. counties analyzed in the report. But that figure is down from 70.4 percent in the fourth quarter of 2019 and 69.8 percent from the first quarter of 2019.

The report also shows that owning a median-priced home in the first quarter of 2020 in the United States – costing $252,500 – consumes 31.1 percent of the national average wage. That percentage is down from 31.4 percent in the fourth quarter of 2019 and 31.6 percent in the first quarter of 2019, to the lowest percentage since the fourth quarter of 2017, when the average workers were spending 30.8 percent of wages to own a home.

The report determined affordability for average wage earners by calculating the amount of income needed to make monthly house payments — including mortgage, property taxes and insurance — on a median-priced home, assuming a 3 percent down payment and a 28 percent maximum "front-end" debt-to-income ratio. That required income was then compared to annualized average weekly wage data from the Bureau of Labor Statistics (see full methodology below).

 View Q1 2020 U.S. Home Affordability Heat Map 

"Home affordability has inched ahead this year across the United States as buying a house or a condo gets closer and closer to the level where the average wage earner can swing the deal within standard lending guidelines. While the national median price still remains a bit out of reach for the average wage earner, the affordability gap has narrowed to the smallest point in more than two years," said Todd Teta, chief product officer with ATTOM Data Solutions. "It seems bizarre that median home prices have risen 8 percent over the past 12 years while average wages grew by less than half that amount. But falling interest rates continue making up the difference, dropping monthly home ownership payments in a majority of the country."

"All that may change in a huge way over the next few months as the impact of the coronavirus hits the housing market. We are entering a period of great uncertainty," he added. "But in the initial months of the year, the picture has appeared to continue to brighten for home seekers."

The most populous counties where a median-priced home in the first quarter of 2020 was not affordable for average wage earners include Los Angeles County, CA; Maricopa County (Phoenix), AZ; San Diego County, CA; Orange County, CA (in the Los Angeles, CA metropolitan statistical area) and Miami-Dade County, FL. The report analyzed 483 counties with a population of at least 100,000 and at least 100 homes sales in the first quarter of 2020.

The 164 counties (34 percent) where a median-priced home in the first quarter of 2020 is affordable for average wage earners include Cook County (Chicago) IL; Harris County (Houston), TX; Dallas County, TX; Wayne County (Detroit), MI and Philadelphia County, PA.

Home price appreciation outpacing wage growth in 64 percent of markets
Annual home price appreciation is outpacing average weekly wage growth in the first quarter of 2020 in 309 of the 483 counties analyzed in the report (64 percent), with the largest counties including Los Angeles County, CA; Maricopa County (Phoenix), AZ; San Diego County, CA; Orange County, CA (in the Los Angeles, CA metropolitan statistical area) and Miami-Dade County, FL.

Average annualized wage growth is outpacing home price appreciation in 174 of the 483 counties (36 percent), including Cook County (Chicago), IL; Harris County (Houston), TX; Queens County, NY; King County (Seattle), WA and Tarrant County (Fort Worth), TX.

At least 30 percent of wages needed to buy a home in more than half of markets
Among the 483 counties analyzed in the report, 288 (59.6 percent) currently require at least 30 percent of their annualized weekly wages to buy a home. Those counties that require the greatest percent of wages include Kings County (Brooklyn), NY (108.1 percent of annualized weekly wages needed to buy a home); Santa Cruz County, CA (in the San Jose metro area) (92.8 percent); Marin County, CA (in the San Francisco metro area) (91.5 percent); Maui County, HI (88.5 percent) and Monterey County, CA (in the San Francisco metro area) (86.8 percent).

A total of 195 counties in the report (40.4 percent) require less than 30 percent of their annualized weekly wages to buy a home. Those counties that require the smallest percent include Baltimore City/County, MD (9.5 percent of annualized weekly wages needed to buy a home); Madison County, IN (in the Indianapolis metro area) (10.8 percent); Bibb County, GA (in the Macon metro area) (11.4 percent); Calhoun County, MI (in the Battle Creek metro area) (11.7 percent) and Rock Island County, IL (in the Davenport metro area) (12.4 percent).

Two-thirds of markets more affordable than historic averages
Among the 483 counties in the report, 323 (66.9 percent) are more affordable than their historic affordability averages in the first quarter of 2020, up from 55.1 percent in the fourth quarter of 2019 and 49.7 percent from the first quarter of 2019.

Counties with the highest affordability indexes are Madison County, IN (in the Indianapolis metro area) (index of 186); Baltimore City/County, MD (159); Mercer County, NJ (in the Trenton metro area) (159); Peoria County, IL (149) and Onslow County, NC (in the Jacksonville metro area) (145).

Counties with at least 1 million people that are more affordable than their historic averages (indexes of at least 100 are considered more affordable compared to their historic averages) include Cook County (Chicago), IL (index of 128); Montgomery County, MD (in the Washington, DC, metro area) (122); New York County (Manhattan), NY (118); Fairfax County, VA (in the Washington, DC, metro area) (117) and Cuyahoga County (Cleveland), OH (116).

The biggest annual gains among other counties include Johnson County, IN (in the Indianapolis metro area) (index up 41 percent); Butte County, CA (in the Chico metro area) (up 36 percent); Niagara County, NY (in the Buffalo metro area) (up 35 percent); Onondaga County, NY (in the Syracuse metro area) (up 27 percent) and Saint Clair County, IL (in the St. Louis, MO, metro area) (up 26 percent).

Counties with at least 1 million people that saw the biggest annual improvement in their affordability indexes include New York County (Manhattan), NY (index up 23 percent); Bronx County, NY (up 19 percent); King County (Seattle), WA (up 14 percent); Alameda County (Oakland), CA (up 13 percent) and Contra Costa County, CA (in the San Francisco metro area) (up 12 percent).

One-third of markets less affordable than historic averages
Among the 483 counties analyzed in the report with a population of at least 100,000 and at least 100 home sales in the first quarter of 2020, 160 (33.1 percent) are less affordable than their historic affordability averages in the first quarter of 2020, down from 44.9 percent of counties in the previous quarter and 50.3 percent of counties in the first quarter of 2019.

Counties with the lowest affordability indexes include Canyon County, ID (in the Boise metro area) (index of 74); Orleans Parish (New Orleans), LA (80); Ada County, ID (in the Boise metro area) (80); Benton County, WA (east of Portland, OR) (81) and Genesee County, MI (in the Flint metro area) (82).

Counties with a population greater than 1 million that are less affordable than their historic averages (indexes of less than 100 are considered less affordable compared to their historic averages) include Wayne County (Detroit), MI (index of 86); Tarrant County (Fort Worth), TX (88); Dallas County, TX (90); Salt Lake County (Salt Lake City), UT (92) and Maricopa County (Phoenix), AZ (93).

Counties with the biggest year-over-year decreases in their affordability indexes are Madison County, IN (in the Indianapolis metro area) (down 54 percent); Bibb County, GA (in the Macon metro area) (down 17 percent); Warren County, NJ (in the Allentown, PA, metro area) (down 16 percent); Saint Louis City/County, MO (down 15 percent) and Erie County, PA (down 14 percent).

Among the counties with at least 1 million people, the only ones with a decline in their annual affordability indexes in the first quarter of 2020 are Philadelphia County, PA (index down 3 percent); Wayne County (Detroit), MI (down 1 percent); Suffolk County, NY (in the New York City metro area) (down 1 percent) and Mecklenburg County, NC (in the Charlotte metro area) (down 0.4 percent)

Report Methodology
The ATTOM Data Solutions U.S. Home Affordability Index analyzes median home prices derived from publicly recorded sales deed data collected by ATTOM Data Solutions and average wage data from the U.S. Bureau of Labor Statistics in 483 U.S. counties with a combined population of 235 million. The affordability index is based on the percentage of average wages needed to make monthly house payments on a median-priced home with a 30-year fixed rate mortgage and a 3 percent down payment, including property taxes, home insurance and mortgage insurance. Average 30-year fixed interest rates from the Freddie Mac Primary Mortgage Market Survey were used to calculate the monthly house payments.

The report determined affordability for average wage earners by calculating the amount of income needed to make monthly house payments — including mortgage, property taxes and insurance — on a median-priced home, assuming a 3 percent down payment and a 28 percent maximum "front-end" debt-to-income ratio. For instance, the nationwide median home price of $252,500 in the first quarter of 2020 would require an annual gross income of $65,107 for a buyer putting 3 percent down and not exceeding the recommended "front-end" debt-to-income ratio of 28 percent — meaning the buyer would not be spending more than 28 percent of his or her income on the house payment, including mortgage, property taxes and insurance. That required income is lower than the $58,708 annual wages earned by an average worker in the United States based on the most recent average weekly wage data available from the Bureau of Labor Statistics, making a median-priced home nationwide not affordable for an average wage earner.

About ATTOM Data Solutions
ATTOM Data Solutions provides premium property data to power products that improve transparency, innovation, efficiency and disruption in a data-driven economy. ATTOM multi-sources property tax, deed, mortgage, foreclosure, environmental risk, natural hazard, and neighborhood data for more than 155 million U.S. residential and commercial properties covering 99 percent of the nation's population. A rigorous data management process involving more than 20 steps validates, standardizes and enhances the data collected by ATTOM, assigning each property record with a persistent, unique ID — the ATTOM ID. The 9TB ATTOM Data Warehouse fuels innovation in many industries including mortgage, real estate, insurance, marketing, government and more through flexible data delivery solutions that include bulk file licenses, property data APIs, real estate market trends, marketing lists, match & append and introducing the first property data delivery solution, a cloud-based data platform that streamlines data management – Data-as-a-Service (DaaS).

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