HOME AFFORDABILITY IMPROVES SLIGHTLY ACROSS U.S. DURING FIRST QUARTER BUT REMAINS DIFFICULT FOR AVERAGE WORKERS

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Mar 28, 2024, 00:01 ET

Major Home-Ownership Expenses Require Smaller Portion of Wages for Second-Straight Quarter; Historical Affordability Also Inches Upward; But Both Measures Remain Near Worst Levels in 15 Years as Home Prices Stay Close to All-Time Highs

IRVINE, Calif., March 28, 2024 /PRNewswire/ -- ATTOM, a leading curator of land, property, and real estate data, today released its first-quarter 2024 U.S. Home Affordability Report showing that median-priced single-family homes and condos remain less affordable in the first quarter of 2024 compared to historical averages in more than 95 percent of counties around the nation with enough data to analyze. The latest trend continues a pattern, dating back to 2022, of home ownership requiring historically large portions of wages around the country.

The report also shows that major expenses on median-priced homes consume 32.3 percent of the average national wage in the first quarter, several points above common lending guidelines.

Both measures represent slight quarterly improvements but remain worse than a year ago and still sit at levels that have worked against home buyers for three years. That scenario has continued as increases in home values and major home-ownership expenses have outpaced gains in wages, despite a small respite from the second half of last year into the first quarter of 2024.

As a result, the portion of average wages nationwide required for typical mortgage payments, property taxes and insurance remains up almost three percentage points from a year ago and 11 points from early in 2021, right before home-mortgage rates began shooting up from their lowest levels in decades. The latest expense-to-wage ratio continues to sit above the 28 percent level preferred by mortgage lenders and marks one the highest points over the past decade.

"The picture for home buyers is brightening a little again as affordability measures have improved for the second quarter in a row," said Rob Barber, CEO for ATTOM. "For sure, it's not like things are coming up roses for house hunters. Affording a home remains a financial stretch, or a pipe dream, for so many households. But with mortgage rates coming down and home prices growing only by modest amounts, it's gotten a bit easier for average wage earners to afford a home so far this year. The upcoming Spring buying season will say a lot about whether home prices remain stable enough for this trend to continue."

The first-quarter patterns come as the national median home price has risen less than 2 percent this quarter from the previous quarter and is still down from peaks hit last year. Further aiding buyers are mortgage rates that have dipped back down below 7 percent for a 30-year fixed loan after rising close to 8 percent in 2023. Inflation, while still running close to 4 percent, is less than half the levels hit in 2021.

Those factors have helped reduce home ownership expenses following a period when they were shooting up faster than wages.

The report determined affordability for average wage earners by calculating the amount of income needed to meet major monthly home ownership expenses — including mortgage payments, property taxes and insurance — on a median-priced single-family home, assuming a 20 percent down payment and a 28 percent maximum "front-end" debt-to-income ratio. That required income was then compared to annualized average weekly wage data from the U.S. Bureau of Labor Statistics (see full methodology below).

Compared to historical levels, median home ownership costs in 577 of the 590 counties analyzed in the first quarter of 2024 are less affordable than in the past. That number is down slightly from 584 of the same counties in the fourth quarter of last year but up from 549 in the first quarter of last year, and more than 10 times the figure from early 2021.

Meanwhile, the portion of average local wages consumed by major home-ownership expenses on typical homes is considered unaffordable during the first quarter of 2024 in 425, or 72 percent, of the 590 counties in the report, based on the 28 percent guideline. Counties with the largest populations that are unaffordable in the first quarter are Los Angeles County, CA; Maricopa County (Phoenix), AZ; San Diego County, CA; Orange County, CA (outside Los Angeles) and Miami-Dade County, FL.

The most populous of the 165 counties where major expenses on median-priced homes are still affordable for average local workers in the first quarter of 2024 are Cook County (Chicago), IL; Harris County (Houston), TX; Wayne County (Detroit), MI; Philadelphia County, PA, and Oakland County, MI (outside Detroit).

View Q1 2024 U.S. Home Affordability Heat Map

National median home price up quarterly but still down annually, with declines throughout nation

The national median price for single-family homes and condos has grown to $336,250 in the first quarter of 2024, just $9,000 less than the all-time high of $345,000 hit several times in the past two years. The latest figure is up 1.9 percent from $330,000 in the fourth quarter of 2023 and up 5.1 percent from $319,900 in the first quarter of last year.

Data was analyzed for counties with a population of at least 100,000 and at least 50 single-family home and condo sales in the first quarter of 2024.

Among the 46 counties in the report with a population of at least 1 million, the biggest year-over-year increases in median prices during the first quarter of 2024 are in Orange County, CA (outside Los Angeles) (up 14.6 percent); Santa Clara County (San Jose), CA (up 10.3 percent); Palm Beach County (West Palm Beach), FL (up 9.9 percent); Nassau County, NY (outside New York City) (up 8.9 percent) and Miami-Dade County, FL (up 8.7 percent).

Counties with a population of at least 1 million where median prices remain down the most from the first quarter of 2023 to the same period this year are Travis County (Austin), TX (down 8.1 percent); New York County (Manhattan), NY (down 7.9 percent); Bexar County (San Antonio), TX (down 3.8 percent); Tarrant County (Forth Worth), TX (down 3.2 percent) and Alameda County (Oakland), CA (down 2.5 percent).

Prices growing faster than wages in half the U.S.

With home values mostly up annually throughout the U.S., year-over-year price changes are outpacing changes in weekly annualized wages during the early months of 2024 in 358, or 60.7 percent, of the counties analyzed in the report.

The current group of counties where prices are increasing more than wages annually, or decreasing less, includes Los Angeles County, CA; Cook County, (Chicago), IL; Maricopa County (Phoenix), AZ; San Diego County, CA, and Orange County, CA (outside Los Angeles).

On the flip side, year-over-year changes in average annualized wages have bested price movements during the first quarter of 2024 in 232 of the 590 counties analyzed (39.3 percent). The latest group where wages are increasing more, or declining less, than prices include Harris County (Houston), TX; Dallas County, TX; Tarrant County (Fort Worth), TX; Bexar County (San Antonio), TX, and Alameda County (Oakland), CA.

Portion of wages needed for home ownership dips quarterly but remains up annually in most of nation

With mortgage rates tracking downward in recent months after rising last year, the portion of average local wages consumed by major expenses on median-priced, single-family homes and condos has decreased from the fourth of 2023 to the first quarter of 2024 in 91.5 percent of the 590 counties analyzed. However, it remains up annually in 90.3 percent of those markets.

The typical $1,930 cost of mortgage payments, homeowner insurance, mortgage insurance and property taxes nationwide consumes 32.3 percent of the average annual national wage of $71,708 this quarter. That is down from 33.2 percent in the fourth quarter of 2023 as expenses commonly have dropped almost 3 percent while wages have remained flat nationwide. But the latest portion is up from 29.6 percent in the first quarter of last year and is far above the recent low point of 21.3 percent hit in the first quarter of 2021 as wage gains have lagged behind increases in expenses over that longer time period.

The latest figure exceeds the 28 percent lending guideline in 425, or 72 percent, of the counties analyzed, assuming a 20 percent down payment. That is down from 78.3 percent of the same group of counties in the fourth quarter of 2023 but still up from 64.9 percent a year ago and more than twice the level in early 2021.

In almost a third of the markets analyzed, major expenses currently consume at least 43 percent of average local wages – an amount considered seriously unaffordable.

Home ownership on the northeast and west coasts still eats up largest chunk of wages

The top 20 counties where major ownership costs require the largest percentage of average local wages are again in the Northeast or on the west coast. The leaders are Kings County (Brooklyn), NY (109.5 percent of annualized local wages needed to buy a single-family home); Marin County, CA (outside San Francisco) (102.8 percent); Maui County, HI (100.5 percent); Santa Cruz County, CA (97.3 percent) and San Luis Obispo County, CA (95.3 percent).

Aside from Kings County, those with a population of at least 1 million where major ownership expenses typically consume more than 28 percent of average local wages in the first quarter of 2024 include Orange County, CA (outside Los Angeles) (95.1 percent required); Queens County, NY (78.5 percent); Nassau County (outside New York City), NY (74 percent) and Riverside County, CA (71.4 percent).

Counties where the smallest portion of average local wages are required to afford the median-priced home during the first quarter of this year are Macon County (Decatur), IL (11.9 percent of annualized weekly wages needed to buy a home); Schuylkill County, PA (outside Allentown) (12.1 percent); Jefferson County (Birmingham), AL (12.5 percent); Cambria County, PA (east of Pittsburgh) (12.7 percent) and Peoria County, IL (12.9 percent).

Counties with a population of at least 1 million where major ownership expenses typically consume less than 28 percent of average local wages in the first quarter of 2024 include Wayne County (Detroit), MI (13.3 percent); Allegheny County (Pittsburgh), PA (17.3 percent); Cuyahoga County (Cleveland), OH (17.7 percent); Philadelphia County, PA (18.4 percent) and Harris County (Houston), TX (24.6 percent).

Almost all local markets remain historically less affordable

Among the 590 counties analyzed, 577, or 97.8 percent, are less affordable in the first quarter of 2024 than their historic affordability averages. That is slightly better than the 99 percent level in the fourth quarter of 2023, but worse than the 93.1 percent portion from of a year ago and more than 10 times the 7.8 percent figure from the first quarter of 2021. Historical indexes have worsened since the first quarter of last year in 90.3 percent of those counties, leaving the nationwide index at one of its lowest points over the past decade.

Counties with the worst affordability indexes in the first quarter of 2024 include Linn County, IA (index of 30); Jasper County, MO (index of 55); St. Lucie County (Port St. Lucie), FL (56); Blount County, TN (outside Knoxville) (56); and Clayton County, GA (outside Atlanta) (57).

Counties with a population of at least 1 million that are less affordable than their historic averages (indexes of less than 100 are considered historically less affordable) include Mecklenburg County (Charlotte), NC (index of 65); Hillsborough County (Tampa), FL (66); Collin County (Plano), TX (67); Maricopa County (Phoenix), AZ (67) and Clark County (Las Vegas), NV (68).

Among counties with a population of at least 1 million, those where the affordability indexes have worsened most from the first quarter of 2023 to the first quarter of 2024 are Orange County, CA (outside Los Angeles) (index down 16.5 percent); Philadelphia County, PA (down 13.5 percent); Santa Clara County (San Jose), CA (down 12.5 percent); Nassau County, NY (outside New York City) (down 11.8 percent) and Fulton County (Atlanta), GA (down 11.5 percent).

Just 2 percent of markets are more affordable than historic averages

Only 13 of the 590 counties in the report (2.2 percent) are more affordable than their historic averages in the first quarter of 2024. That is slightly more than the 1 percent level in the fourth quarter of this year, but less than 6.9 percent a year ago and far worse than the 92.2 percent portion that were historically more affordable in the first quarter of 2021.

Counties that are more affordable in the first quarter of this year compared to historical averages include Jefferson County (Birmingham), AL (index of 136); Macon County (Decatur), IL (130); New York County (Manhattan), NY (115); Midland County, TX (112) and San Francisco County, CA (109).

Report Methodology

The ATTOM U.S. Home Affordability Index analyzed median home prices derived from publicly recorded sales deed data collected by ATTOM and average wage data from the U.S. Bureau of Labor Statistics in 590 U.S. counties with a combined population of 260.8 million during the first quarter of 2024. The affordability index is based on the percentage of average wages needed to pay for major expenses on a median-priced home with a 30-year fixed-rate mortgage and a 20 percent down payment. Those expenses include property taxes, home insurance, mortgage payments and mortgage insurance. Average 30-year fixed interest rates from the Freddie Mac Primary Mortgage Market Survey were used to calculate monthly house payments.

The report determined affordability for average wage earners by calculating the amount of income needed for major home-ownership expenses on median-priced homes, assuming a loan of 80 percent of the purchase price and a 28 percent maximum "front-end" debt-to-income ratio. For example, affording the nationwide median home price of $336,250 in the first quarter of 2024 requires an annual wage of $82,708. That is based on a $67,250 down payment, a $269,000 loan and monthly expenses not exceeding the 28 percent barrier — meaning wage earners would not be spending more than 28 percent of their pay on mortgage payments, property taxes and insurance. That required income is more than the $71,708 average wage nationwide, based on the most recent average weekly wage data available from the Bureau of Labor Statistics, making a median-priced home nationwide unaffordable for average workers.

About ATTOM
ATTOM provides premium property data to power products that improve transparency, innovation, efficiency, and disruption in a data-driven economy. ATTOM multi-sources property tax, deed, mortgage, foreclosure, environmental risk, natural hazard, and neighborhood data for more than 155 million U.S. residential and commercial properties covering 99 percent of the nation's population. A rigorous data management process involving more than 20 steps validates, standardizes, and enhances the real estate data collected by ATTOM, assigning each property record with a persistent, unique ID — the ATTOM ID. The 30TB ATTOM Data Warehouse fuels innovation in many industries including mortgage, real estate, insurance, marketing, government and more through flexible data delivery solutions that include ATTOM Cloud, bulk file licenses, property data APIs, real estate market trends, property navigator and more. Also, introducing our newest innovative solution, making property data more readily accessible and optimized for AI applications– AI-Ready Solutions.

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