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One in four U.S. housing markets less affordable

ATTOM Data Solutions, curator of the nation’s largest fused property database, has released its Q1 2017 U.S. Home Affordability Index, which shows that one in every four county housing markets analyzed for the report were less affordable than their historic affordability averages in the first quarter of 2017.

A total of 95 counties out of 379 counties analyzed for the report (25 percent) posted an affordability index below 100 in Q1 2017 — the highest share of markets below the normal affordability index of 100 since Q4 2009. An affordability index below 100 means that the share of averages wages needed to buy a median-priced home is above the historic average for a given market.

Nationally the affordability index in the first quarter of 2017 was 103, down from 108 in the previous quarter and down from 119 a year ago to the lowest level since Q4 2008 — a more than eight-year low.

“Home affordability continued to worsen in the first quarter, not surprising given the continued strong growth in home prices combined with the recent rise in mortgage rates,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “Stronger wage growth is the silver lining in this report, outpacing home price growth in more than half of the markets for the first time since Q1 2012, when median home prices were still falling nationwide.”

More than 43 percent of average wages needed to buy a home in 97 counties

Average wage earners would need to spend more than 43 percent of their income — the maximum debt-to-income ratio allowed for a “qualified mortgage” under guidelines from the Consumer Financial Protection Bureau (CFPB) — to buy a median-priced home in 97 of the 379 counties (26 percent) analyzed for the report.

“Many homebuyers have been priced out of the Seattle housing market, forcing them to buy in other counties and commute,” said Matthew Gardner, chief economist at Windermere Real Estate, covering the Seattle housing market, where all three counties in the metro area posted worsening affordability compared to a year ago. “The data also shows that the affordability level in King County has eroded to levels we haven’t seen since 2010. Moreover, I believe that it will get worse before it gets better thanks to our growing population, inadequate infrastructure, and land constraints.”

Least affordable and most affordable counties

Average wage earners would need to spend more than 100 percent of their income to buy a median-priced home in five of the 379 counties analyzed. Average wage earners would need to spend less than 15 percent of their income to buy a median-priced home in 12 of the 379 counties analyzed.

“Consumer confidence is increasing, as we are seeing a year-over-year wage increase. The wage increase, coupled with shortage of inventory, is creating a market where we are seeing median home prices increase over historic pricing,” said Matthew Watercutter, senior regional vice president and broker of record for HER Realtors, covering the Dayton, Columbus and Cincinnati markets in Ohio. “This is good news for sellers, but there is still great news for buyers. The percentage of wages needed to buy have decreased, which shows the median wages are growing at a faster pace than the sales prices.”

Wage growth outpaces home price growth in 53 percent of counties

Annual wage growth outpaced annual growth in median home prices in 199 of the 379 counties (53 percent) analyzed in the report. It was the highest percentage of counties with wage growth outpacing home price growth since home prices bottomed out nationwide in Q1 2012.

Affordability improves from a year ago in 9 percent of counties

Counter to the national trend, affordability improved compared to a year ago in 35 of the 379 counties (9 percent) analyzed in the report. Annual wage growth outpaced home price growth in all 35 of the counties with improving affordability.

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