While home prices are quickly rising to the point of pricing out some buyers, low mortgage rates have helped to offset some of those higher prices.
The median home price of single-family homes and condos in the first quarter of this year was still more affordable than the historical averages of 52% of the 552 counties analyzed by ATTOM Data Solutions. However, that figure is down from 63% in the first quarter of 2020 and from 95% in the first quarter of 2016.
Rising workplace pay and historically low home mortgage rates are helping to offset double-digit annual home price increases. Still, buying a median-priced home nationwide required nearly 24% of average wages across the country in the first quarter of 2021, up from 22% in the first quarter of 2020.
ATTOM Data Solution’s home affordability report determines affordability for average wage earners for a median-priced home by calculating the amount of income needed to meet monthly homeownership expenses, including mortgage, property taxes, and insurance. Researchers assume a 20% down payment and a 28% maximum “front-end” debt-to-income ratio.
Fifty-nine percent of counties tracked in the first quarter had homeownership expenses that were affordable for average local wage earners. The largest of those counties for housing affordability included Cook County, Ill. (Chicago); Harris County, Texas (Houston); Dallas County, Texas; Bexar County, Texas (San Antonio); and Wayne County, Mich. (Detroit).
The chart shows the most populous counties in the country where homeownership was the most affordable in the first quarter of this year.
Source: ATTOM Data Solutions