Home-Ownership Costs Highest Since 2007
ATTOM report shows that median home prices in 577 of the 581 counties are less affordable than in the past.
Although homeownership expenses as a percentage of income now stand at their highest level since 2007, there is a scenario where affordability improves as we move through 2023, according to a report this week from real estate data curator ATTOM.
Its executive vice president of market intelligence Rick Sharga said wage growth continues to be strong; home prices appear to have stabilized and are even going down slightly; and mortgage rates may have peaked for this cycle and could go down gradually next year.
“If those conditions remain in place, the affordability picture is much brighter for a lot of potential buyers,” he said in prepared remarks.
The portion of average wages nationwide required for typical major home-ownership expenses has risen to 32.3 percent this quarter.
That figure – considered unaffordable by traditional lending standards – is up from 29.6 percent in the third quarter of this year and from 23.8 percent a year ago.
Nearly All US Markets Are ‘Less Affordable’ Compared to a Year Ago
According to the report, compared to historical levels, median home prices in 577 of the 581 counties analyzed in the fourth quarter of 2022 are less affordable than in the past. The latest number is up slightly from 572 of the same group of counties in the third quarter of 2022. But it is well up from 393 in the fourth quarter of 2021 and just 181, or less than a third, two years ago.
Meanwhile, major home-ownership expenses on typical homes are unaffordable to average local wage earners during the fourth quarter of 2022 in 427, or about three-quarters, of the 581 counties in the report, based on the 28-percent lending guideline. Counties with the largest populations that are unaffordable in Q4 are Los Angeles County, CA; Maricopa County (Phoenix), AZ; San Diego County, CA; Orange County, CA (outside Los Angeles) and Kings County (Brooklyn), NY.
The most populous of the 181 counties where major expenses on median-priced homes remain affordable for average local workers in Q4 2022 are Cook County (Chicago); Harris County (Houston); Wayne County (Detroit); Philadelphia County; and Cuyahoga County (Cleveland).