According to ATTOM™ Data Solutions, the Irvine, California-based nationwide provider of property data, the sharp and continued rise in property values continues to thwart the average wage earner in the U.S. ability to purchase a single-family home. A dataset covering the top 572 counties in the U.S was used to determine home affordability for average wage earners by calculating the amount of income needed to meet monthly household expenses — including mortgage, taxes, and insurance — and assumed a 20% down payment and a 28% debt-to-income ratio.
The data set revealed (again) that homes are less affordable in Q3 when compared with past years, with homes being less affordable in 75% of the counties surveyed. This is up from 56% during the same period in 2020 and is the highest level of unaffordability since 2008 due to the fact that wages have largely remained stagnant for years.
In a statement prepared for the release of the data set, Todd Teta, Chief Product Officer with ATTOM said, “The typical median-priced home around the U.S. remains affordable to workers earning an average wage, despite prices that keep going through the roof. Super-low interests and rising pay continue to be the main reasons why.”
Teta added, “But affordability keeps inching in the wrong direction as the housing market boom keeps roaring ahead. That’s pushing average workers closer and closer to the point where lenders might be reluctant to give them a mortgage. With much still uncertain about how the pandemic and many other forces could still affect the economy, affordability remains a crucial measure of market stability that could easily keep going in the same direction or swing back the other way.”
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