Attom Data Solutions released the results of its Q1 2018 U.S. Home Affordability Report, which showed that average wage earners ($57,009) could not afford a median-priced home in 68 percent of U.S. counties (304 out of 446).
Attom determined “affordability” by calculating the amount of income needed to make monthly house payments — including mortgage, property taxes and insurance — on a median-priced home with a 3 percent down payment and a 28 percent maximum “front-end” debt-to-income ratio.
On the other hand, Maricopa County (Phoenix), Arizona experienced the largest net migration increase at 49,770 new residents, followed by Clark County (Las Vegas), Nevada (+36,635); Riverside County, California (+23,397); Denton County, Texas in the Dallas metro area (+21,333); and Hillsborough County, Florida, in the Tampa-St. Petersburg metro area (+20,603).
What does it take to afford a home?
Nationwide, average wage earners would need to spend 29.1 percent of their income to buy a median-priced home — a 0.5 percentage point decrease from Q1 2017.
However, as home price appreciation outpaces wage growth in 83 percent of markets, some owners are spending over 100 percent of their income on housing costs.
Average earners in Kings County (Brooklyn), New York spend the largest share of their income (119.0 percent) on housing, followed by Santa Cruz County, California (108.8 percent); Marin County, California in the San Francisco metro area (106.3 percent); Maui County, Hawaii (94.1 percent); and New York County (Manhattan), New York (92.5 percent).
Attom Data Solutions senior vice president Daren Blomquist says earners aspiring to purchase in affordable markets should buy as soon as possible, since demand from out-of-state buyers will drive up home prices.
“That in turn is pushing home prices above historically normal affordability limits in those middle-America markets.” 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 446 U.S. counties with a combined population of more than 221 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.