Home >> Daily Dose >> Improved Affordability? In Some Places, But Not All
Print This Post Print This Post

Improved Affordability? In Some Places, But Not All

Some recent data has indicated that housing markets are becoming more affordable. But just how affordable are they when compared with historical standards?

The answer is: not very affordable in nearly a quarter of U.S. housing markets, according to ATTOM Data Solutions Q3 2015 Home Affordability Index released Thursday. ATTOM’s analysis showed that 24 percent of housing markets were less affordable than their historic averages—an increase from 19 percent in Q3 a year ago and the highest share since the third quarter of 2009, when 47 percent of housing markets were less affordable when compared with their historic benchmarks.

“The improving affordability trend we noted in our second quarter report reversed course in the third quarter as home price appreciation accelerated in the majority of markets and wage growth slowed in the majority of local markets as well as nationwide, where average weekly wages declined in the first quarter of this year following 13 consecutive quarters with year-over-year increases,” said Daren Blomquist, SVP at ATTOM Data Solutions. “This unhealthy combination resulted in worsening affordability in 63 percent of markets despite mortgage rates that are down 45 basis points from a year ago.”

The historical standard used for comparison is the share of an average wage needed to make a monthly house payment on median priced-home with a 30-year fixed-rate mortgage and a down payment of just 3 percent (which includes insurance and property taxes). ATTOM analyzed 414 U.S. counties with a combined population of more than 203 million. Twenty-four percent of the counties (101 of them) were found to have affordability index values of less than 100, meaning that a median-priced home is less affordable in Q3 2016 than its historic average in those counties.

Affordability worsened in 261 counties year-over-year in Q3 (63 percent of those analyzed), notably in Miami-Dade County (5 percent worse), Harris County (Houston), Texas (3 percent), and Maricopa County (Phoenix), Arizona (3 percent).

Conversely, affordability improved in 153 counties (37 percent) over-the-year in Q3, notably in high-priced markets such as Marin County, California, in the Bay Area (1 percent), Santa Clara County (San Jose), California (3 percent), Arlington County, Virginia, in the Washington, D.C. area (5 percent), Kings County (Brooklyn), New York (5 percent), and Maui County, Hawaii (1 percent).

“Some silver lining in this report is that affordability actually improved in some of the highest-priced markets that have been bastions of bad affordability, mostly the result of annual home price appreciation slowing to low single-digit percentages in those markets,” Blomquist said. “This is an indication that home prices are finally responding to affordability constraints—a modicum of good news for prospective buyers who have been priced out of those high-priced markets.”

The homeownership rate during Q2, 62.9 percent, was at its lowest level since the Census Bureau began reporting the data in 1965, and inventory has been an ongoing issue in housing markets for several months. Earlier in September, a Redfin analysis revealed that more than half of the homes in 25 out of 40 U.S. metros were both large enough and affordable enough to accommodate a working class household. In Detroit, 97 percent of homes for sale fit these criteria, while more 80 percent of homes listed in Cleveland, Baltimore, Columbus, Memphis, and Philadelphia fit the bill.

About Author: Seth Welborn

Seth Welborn is a Harding University graduate with a degree in English and a minor in writing. He is a contributing writer for MReport. An East Texas Native, he has studied abroad in Athens, Greece and works part-time as a photographer.
x

Check Also

Survey: Homeownership Remains Elusive for Baby Boomer Renters

A recent look into housing affordability by NeighborWorks America has found that three in five long-term baby boomer renters feel homeownership remains unattainable.