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Housing Affordability Hits Its Lowest Point in 13 Years

When calculating affordability, low mortgage rates have offset rising home prices so far, but 75% of U.S. counties are now less affordable than their historical average.

MIAMI – According to ATTOM Data Solutions LLC, about 75% of counties across the country were less affordable than their historical average during the third quarter of 2021 – an increase from 56% of counties one year earlier (third quarter of 2020) and the worst rate since 2008.

ATTOM reports that 430 out of 572 counties analyzed in the third quarter of 2021 are less affordable than their past averages, up from 317 counties.

The rising lack of affordability comes as the median national home price shot up 18% over the last year to about $315,500. Major ownership costs on the typical home consumed 24.9% of the average national wage of $64,857 in the third quarter, up from 24.3% in the second quarter of 2021 and 22.3% in the third quarter of last year. Lenders generally consider 28% as a ceiling.

The report also found that total homeownership costs are only below 28% in 303 of the counties analyzed.

Home prices have been going up for 10 years, and in the third quarter of 2021, about 67% of counties saw year-over-year price increases of at least 10%. The biggest price increases among counties with at least 1 million people include Middlesex County, near Boston, where prices are up 32% over the same time last year, as well as Arizona’s Maricopa County, up 24%.

ATTOM found homeownership most affordable in three Pennsylvania counties: Schuylkill County at just 9.5%, Fayette County at 10.6%, and Cambria County at 10.9%.

Counties that require the highest share of wages to afford a home include Kings County in Brooklyn (78.7% of weekly wages), Santa Cruz County, California (77.7%), Marin County, California (75.1%), and Maui County, Hawaii (66.2%).

The quickly rising pace of home prices may be starting to even out, however, which may help affordability. In August 2021, about 46.1% of homes sold for more than their initial list price, down from 47.2% in July and from a June peak of 50.4%.

Source: South Florida Business Journal (09/30/21) Medici, Andy

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