Affordability conditions are worse than historical averages in 98% of counties in the nation analyzed by ATTOM Data Solutions, according to the company’s second quarter 2023 U.S. Home Affordability Report.
A jump in home prices during the quarter pushed the typical portion of average wages nationwide required for major homeownership expenses up to 33%, far above the “unaffordable” standard of 28%, according to ATTOM. The level of income required for homeownership expenses in the second quarter was the highest since 2007.
On a sequential basis, the nationwide median single-family home value increased 10% in the second quarter, one of the largest quarterly increases in the past decade according to data tracked by ATTOM.
“The U.S. housing market has done an about-face following a downturn that threatened to usher in an extended period of flat or falling prices. With that has come another blow to how much house the average worker around the country can afford,” says ATTOM CEO Rob Barber. “Whether this is just a temporary blip amid this year’s peak buying season or a sign of another extended price surge is anyone’s guess. But any predictions of a market demise were certainly premature.”
Compared to historical levels, median home prices in 565 of the 574 counties analyzed in the second quarter of 2023 were less affordable than in the past. Major homeownership expenses on typical homes are considered unaffordable to average local wage earners in 420—or about three-quarters—of the counties analyzed. Los Angeles County, Maricopa County in Arizona, San Diego County, Orange County in California, and Kings County in New York rank as the most unaffordable areas in the country, according to ATTOM.
The weekly annualized wage appreciation is outpacing home-price changes in three-quarters of the markets analyzed, but a salary of more than $75,000 is needed to pay for housing costs on median-priced homes in 51% of the country. In line with historical standards, counties where major costs require the largest percentage of wages are concentrated on the East and West coast.
To determine affordability for average wage earners, ATTOM calculated the amount of income needed to meet major monthly homeownership expenses assuming a 20% down payment and a 28% maximum “front-end” debt-to-income ratio.
