Real Estate

Homeownership Became Unaffordable For Most Americans In Q4

The average wage dipped below the level required to afford the typical home in the U.S. as prices skyrocket in the fourth quarter, according to ATTOM Data Solutions. Historically low mortgage rates however, are at least keeping affordability not too far out of the average American’s grasp.

“Owning a home in the United States slipped into the unaffordable zone for average workers across the nation in the fourth quarter as the numbers continued a year-long slide in the wrong direction,” Todd Teta, chief product officer with ATTOM Data Solutions, said in a statement.

Todd Teta | Attom Data Solutions

“That’s happened as home prices have continued rising throughout 2020 and the housing market has remained remarkably resilient in the face of the brutal economic fallout from the coronavirus pandemic.”

Of the 499 counties analyzed by the data firm in the fourth quarter of 2020, 55 percent were less affordable than past averages as the median home price spiked at least 10 percent year-over-year in most counties.

“The future remains wholly uncertain and affordability could swing back into positive territory,” Teta added. “But for now, things are going in the wrong direction for buyers.”

Major home-ownership expenses — mortgage payments, insurance and property taxes — accounted for 29.6 percent of the average wage across the country in the fourth quarter, which was up from 26.4 percent the year prior and ahead of the 28 percent line that lenders prefer.

Just 41 percent of the 499 counties analyzed had major home-ownership expenses on the typical home fall into a level that’s affordable for local wage earners.

The most expensive counties in the country  — ones where the highest annual wages were required to afford the typical home — were San Mateo County in California, followed by New York County in New York. The rest of the top-five were all San Francisco Bay Area counties.

Bibb County in Georgia was the country’s most affordable.

To determine what’s “affordable,” ATTOM calculated the amount of income needed to make monthly payments, which includes mortgage, property taxes and insurance, on a median-priced home, assuming a $100,000 loan and a 28 percent maximum “front-end” debt-to-income ratio, according to the study. ATTOM then compared that to wage data published by the Bureau of Labor Statistics.

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