IRVINE, CA—It's not only Millennials who are getting priced out of single-family housing. ATTOM Data Solutions' Q1 2017 US Home Affordability Index shows that one out of four county housing markets analyzed were less affordable than their historic affordability averages in the first quarter of this year. That's the highest share of markets below the normal affordability index since the end of 2009.

Nationally, the affordability index in Q1 was 103, down from 108 in the prior quarter and off from 119 a year ago to the lowest level since Q4 2008. The index of 103 translates to 33.6% of average weekly wages needed to buy a median-priced home nationwide. Although that's below the historic average of 34.6%, it represents the highest share of wages needed in eight years.

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

Markets above the 43% threshold included Los Angeles, San Diego, Orange, Riverside and San Bernardino counties in Southern California; four of the five counties that comprise New York City; King and Snohomish counties in the Seattle metropolitan area; Santa Clara, Alameda, Contra Costa, San Francisco, San Mateo and Marin counties in Northern California's Bay Area; and nine counties in the Washington, DC metro area.

“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,” says ATTOM SVP Daren Blomquist. “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. If that pattern continues, it will help turn the tide in the eroding home affordability trend.”

That being said, ATTOM reports that home price growth has consistently outpaced wage growth over the past five years. Ninety-six percent of the 379 housing markets analyzed have seen home prices rise at a faster pace than wages since hitting bottom in Q1 of '12, and nationwide median home prices have increased 57% since hitting bottom while average weekly wages have increased 4% during the same time period.

Instant Insights /

Home Affordability Hits 8-Year Low

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