Home affordability increasing in some areas as buyers wade back into market
A home purchase, however, is likely still out of reach for many
As prospective homebuyers look to reenter the housing market, people in some areas may find that home prices appear more reasonable when compared with the same period last year.
Homes are considered affordable in 200 of 406 counties – or 49 percent of markets analyzed by ATTOM Data Solutions in the second quarter, up from 126 last year.
Affordability for average wage earners was determined by calculating the amount of income needed to make monthly house payments.
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While prices have been on the rise, a number of positive factors have helped buyers overcome a 5 percent year-over-year increase.
“A combination of wage gains and declining mortgage rates are helping to override the increases and make homes more affordable in large swaths of the United States,” Todd Teta, chief product officer with ATTOM Data Solutions, said in a statement. “Virus pandemic concerns are still quite valid and may show up in the coming months, which could hurt prices as well as affordability. That remains a significant potential cloud hanging over the market.”
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However, as previously reported by FOX Business, not all homebuyers have been affected equally by the pandemic. Coronavirus-related financial fallout has highlighted a growing wealth gap among homebuyers.
White-collar workers in high-security jobs, like technology, where duties are able to be performed remotely have continued their home searches. Others, who have been struggling more throughout the pandemic, have been priced out of the market.
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The average wage needed to buy a median-priced home is more than $75,000 in one-third of markets, according to ATTOM Data Solutions, with much higher annual wages needed to purchase a home in New York City and San Francisco.
Home price appreciation was also outpacing wage growth in 66 percent of counties analyzed.
And despite a favorable purchase environment, major costs on median-priced homes would consume more than 28 percent of average wages in 74 percent of counties.