Homeownership is less affordable in the last quarter of 2023, a pattern that has remained unchanged since the height of the pandemic, according to data analyst ATTOM.
However, a hint of positivity may be found in the company’s U.S. Home Affordability Report when it comes to Dallas County. It is included in a group of 286 counties where wages are increasing more — or declining less — than prices.
In the majority of counties — 294 — analyzed in the report, however, prices outpaced wages, including in Los Angeles, San Diego, Chicago, and Brooklyn.
The findings are compiled from data that shows median-priced single-family homes and condos remain less affordable in the fourth quarter of the year compared to historical averages in 99% of counties analyzed around the country. According to ATTOM, the latest trend continues a pattern dating back to 2021 of homeownership requiring historically large portions of wages around the country.
The research also indicates that major expenses on median-priced homes account for nearly 34% of the average national wage in the fourth quarter — a level “considered unaffordable by common lending standards,” a press release points out.
“Both measures — historical and current affordability — have stayed virtually the same from the third quarter to the fourth quarter of this year after trending consistently against home buyers for almost three years. That has happened as major ownership expenses and wages both are virtually unchanged this quarter. But the two measures are still worse than they were a year ago and far weaker than in 2021.”
For example, the portion of average wages nationwide required for typical mortgage payments, property taxes, and insurance is up three percentage points from a year ago and 12 points from early in 2021, just before home mortgage rates began shooting up from their lowest levels in decades. The latest expense-to-wage ratio remains above the 28% level preferred by mortgage lenders and marks the highest point since 2007.
@ATTOMdata's Q4 2023 #HomeAffordability Report shows that #homeprices remain #lessaffordable compared to #historicalaverages in 99% of #counties, continuing a pattern dating back to 2021 of #homeownership requiring large portions of #wages: https://t.co/hCdTMO9ZAJ #propertydata pic.twitter.com/TXZ9hk2fJo
— ATTOM (@Attomdata) December 21, 2023
“The good news is that home affordability has stopped getting tougher around the U.S., at least for the moment,” ATTOM CEO Rob Barber said.
“The annual Fall slowdown in the housing market clearly has helped stem the tide working against potential purchasers. Whether that’s just a temporary thing tied to seasonal market patterns is something we won’t know until next year, especially given recent signs that interest rates are coming down. But for now, there is some break into the growing financial stress for house hunters.”
While average 30-year fixed mortgage rates have increased in the fourth quarter from 7.1 to 7.4%, the nationwide median home value has fallen almost 3%. Other findings include:
- Affordability worsened almost every prior quarter since early 2021 as wage increases were outpaced by rising interest rates and prices that kept going up amid a decade-long market boom.
- Median homeownership costs in 572 of the 580 counties analyzed in the fourth quarter are less affordable. That number is the same as in the third quarter and up slightly from the fourth quarter of last year.
- The most populous of the 130 counties where major expenses on median-priced homes are still affordable for average local workers in the fourth quarter are Cook County, Illinois; Harris County, Texas; Wayne County, Michigan; Philadelphia County, Pennsylvania; and Cuyahoga County, Ohio.
- After jumping almost 10% during this year’s spring and summer home-buying season, the national median price for single-family homes and condos has decreased from $344,670 in the third quarter of 2023 to $335,000 in the fourth quarter.
- The typical $2,016 cost of mortgage payments, homeowner insurance, mortgage insurance, and property taxes nationwide accounts for 33.7% of the average annual national wage of $71,708 this quarter. That remains the same as in the third quarter of 2023, as expenses and average wages have risen less than 1% from the third to fourth quarters.
- In more than a third of the markets analyzed, major expenses consume at least 43% of average local wages — an amount considered “seriously unaffordable.”
- Annual wages of more than $75,000 are needed to pay for major costs on median-priced homes purchased during the fourth quarter of 2023 in 332, or 57.2%, of the 580 markets in the report. By comparison, 11% of counties reviewed have average annual wages that high.
- Counties with the worst affordability indices in the fourth quarter of 2023 include Newton County, Georgia; Jackson County, Mississippi; Paulding County, Georgia; St. Lucie County, Florida; and Forsyth County, Georgia.
- Counties that are more affordable in the fourth quarter of this year compared to historical averages include Macon County, Illinois; New York County, New York; San Francisco County, California; Ector County, Texas; and Mercer County, Pennsylvania.
The ATTOM U.S. Home Affordability Index analyzed median home prices derived from publicly recorded sales-deed data collected by ATTOM and average wage data from the U.S. Bureau of Labor Statistics in 580 counties with a combined population of 257.3 million during the fourth quarter. The affordability index is based on the percentage of average wages required to pay for major expenses on a median-priced home with a 30-year fixed-rate mortgage and a 20% down payment.