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Gap Widens Between Wages and Home Sale Prices

Real Estate

For Sale sign outside of residence | Image by Shutterstock

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Homeownership is taking a bigger bite out of wages in North Texas lately, meaning workers need to earn more or work more to afford a home in the area, according to a new report from property data firm ATTOM, per WFAA.

The gap between the median annual salary and the median home price is widening, causing homeownership to fall further out of reach for many Americans.

“Extraordinarily low levels of homes for sale combined with strong demand have caused home prices to soar over the last few years,” stated Rick Sharga, executive vice president of market intelligence at ATTOM, speaking with WFAA.

“But homes remained relatively affordable due to historically low mortgage rates and rising wages,” Sharga explained. “With interest rates almost doubling, homebuyers are faced with monthly mortgage payments between 40% and 50% higher than they were a year ago – payments that many prospective buyers simply can’t afford.”

The report determined affordability for average wage earners by calculating the income needed to meet major monthly homeownership expenses such as a mortgage, property taxes, and insurance on a median-priced single-family home, according to WFAA. It also assumed a 20% down payment and a 28% maximum “front-end” debt-to-income ratio.

Collin County

In Collin County, homeownership expenses consumed 44.1% of median annual wages,  The current median home price in the county is $525,000 (up 28%), and the median yearly wage is $77,766 (up 5.7%).

Dallas County

Dallas County had the lowest portion of median wages going toward home ownership in the region at 30.4%. The median salary in Dallas County is $78,910, and the median second-quarter home sales price is $363,287. Wages are growing in Dallas County at 5.3% year over year. Still, home prices rose 19.8% in the past year through the second quarter.

Denton County

Homeownership in Denton County consumed 51.3% of workers’ wages. The median home sales price in the second quarter was $450,00 (up 21.7%), while the median yearly salary was just $58,357 (up 6.1%).

Tarrant County

In Tarrant County, the percentage of wages required to buy a house is 35.5%. The median salary in Tarrant is $63.687, and the median second-quarter home sales price is $337,075. Wages are growing in Tarrant County at 4.7% yearly, but home prices rose 20.6% in the same interval.

Nationwide

The percentage of nationwide-average wages required for major homeownership expenses has risen to 31.5% this quarter. Meanwhile, the median price of a single-family home hit a new high of $349,000, and 30-year mortgage rates spiked to well over 5%, according to ATTOM.

ATTOM’s report shows that median-priced single-family homes nationwide are less affordable in the second quarter of 2022 compared to historical averages in 97% of counties across the United States.

Additionally, the median national home price spiked 16% over the past year, while average annual wages across the country have grown just 6%.

For those who wish to learn more, ATTOM’s heat map shows a county-by-county breakdown of much of the country.

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