How Much Do Homeowners Spend on Home Costs?


The year is over, and as the first data for the fourth quarter of 2021 begins to arrive, new data shows that home affordability hit a new low last year in a majority of counties nationwide due to the surge. stagnating real estate prices and wages.

According to the quarterly report on housing affordability in the United States published by ATTOM, a California-based real estate information company, homes became less affordable in 440 of the 575 counties analyzed in the report. In other words, housing was less affordable in 77% of the country than in the previous quarter, up from 39% compared to the same period in 2020.

It should be noted that the report, while comprehensive, does not cover all regions of the United States. It only includes counties with enough data to be statistically relevant. To determine affordability, the report calculated the amount of income needed to cover major monthly homeownership expenses – including mortgage, property taxes, and insurance – on a median-priced single-family home, assuming 20% ​​down payment and maximum “initial” debt-to-income ratio. The report also put the median home price at $ 317,500, a new high.

While the average worker can still afford significant homeownership costs in the fourth quarter, the percentage of counties with accessibility worse than historical averages has hit another all-time high since Q3 of 2008.

This model of costs remaining manageable but becoming increasingly less affordable resulted in the typical household consuming 25.2% of the national average wage of $ 65,546, which was determined by the Bureau of Labor Statistics. This number is up from the second and third quarters of 2021, when costs consumed 21.5% and 24.4% of annual revenue, respectively.

Still, these numbers are well within the industry standard of 28% of income that lenders like to see during the application process.

“The average wage earner can still afford a typical home in the United States, but the financial comfort zone continues to shrink as home prices continue to soar and mortgage rates rise,” said Todd teta, product manager at ATTOM. “Historically low rates and rising wages are still the main reasons workers can meet or come very close to standard loan benchmarks in the majority of the countries we analyze. But the share of wages required for major property spending nationwide is approaching levels where banks are becoming less likely to offer home loans. In highly uncertain times, with the pandemic once again threatening the economy, we will continue to monitor this key measure of housing market stability. “

Home prices up 10% or more in two-thirds of the country

“Median single-family home prices in the fourth quarter of 2021 were up 10% or more from the fourth quarter of 2020 in 368, or 64%, of the 575 counties included in the report. Data was analyzed for counties with at least 100,000 residents and at least 50 single-family home and condo sales in the fourth quarter of 2021. “

“Among the 43 counties with at least 1 million people, the largest year-over-year median price gains in the fourth quarter of 2021 are in Middlesex County (outside of Boston), Massachusetts (up 42%); Wake County (Raleigh), North Carolina (+ 27%); Maricopa (Phoenix) County, Arizona (up 26%); Hillsborough County (Tampa), Florida (up 26%) and Clark County (Las Vegas), Nevada (up 23%).

Price increases exceed wage growth in nearly 80% of markets

“Home price appreciation is greater than weekly wage growth in the fourth quarter of 2021 in 447 of the 575 counties analyzed in the report, or 78%, the largest including Harris County (Houston), Texas; Maricopa County (Phoenix), Arizona; San Diego County, California; Orange County, California (outside Los Angeles) and Miami-Dade County, Florida.

Ownership costs still require less than 28% of average local wages in half of the country

“The top costs of owning median-priced homes in the fourth quarter of 2021 consume less than 28% of average local wages in 296 of the 575 counties analyzed in this report (51%), assuming a 20% down payment. This was about the same as the third quarter of 2021 for the same group of counties, but down from around two-thirds in the fourth quarter of last year. “

“The counties where the smallest portion of the average local wages is needed to afford a typical home are Schuylkill County, Pa. (Outside Allentown) (6.5% of the annualized weekly wage needed to buy a house) ; Macon County (Decatur), Illinois (9.2%); Bibb County (Macon), Georgia (9.5%); Wayne County (Detroit), Michigan (10.6%) and Peoria County, Illinois (11.3%).

Only one in five counties demand an annual salary of more than $ 75,000 to afford a typical house

“Annual salaries in excess of $ 75,000 are needed to cover the significant costs of the median-priced home purchased in the fourth quarter of 2021 in just 114, or 20%, of the 575 markets in the report. ”

“The 30 highest annual salaries required to afford typical homes are all found on the East or West Coasts, led by New York County (Manhattan), New York ($ 274,679); San Mateo County (outside of San Francisco), California ($ 252,589); San Francisco County, California ($ 251,054); Santa Clara County (San Jose), California ($ 229,301) and Marin County (outside of San Francisco), California ($ 223,713).

Homeownership less affordable than historical averages in three-quarters of counties

“Of the 575 counties analyzed in the report, 440 (77%) are less affordable in Q4 2021 than their historic affordability averages. This is roughly the same as in the third quarter of 2020, when 74% of the same group of counties were historically less affordable, but well above the 39% level in the fourth quarter of last year. “

Click here to view the full report, including methodology and interactive maps.


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