Home affordability has slowly become more feasible across the country for average wage earners, but that could soon be a thing of the past with the onset of the coronavirus outbreak, according to a new report by ATTOM Data Solutions.
The report notes in its 2020 U.S. Home Affordability Report that median home prices in the first financial quarter of the year are still unaffordable for average wage earners in 66% of the 483 counties analyzed.
While not stellar, that percentage is down from 70.4% in Q4 2019 and 69.8% in the first quarter of last year.
ATTOM notes that that the median price of $252,500 for a home in Q1 2020 consumed 31.1% of the national wage, down from 31.6% in Q4 2019 and 31.6% in Q1 2019.
ATTOM determined affordability by determining the income needed to pay the mortgage payment, property taxes and insurance of a median-priced home, assuming a 3% downpayment and 28% maximum “front-end” debt-to-income ratio. That was compared to the Bureau of Labor Statistics’ average weekly wage data.
Todd Teta, chief product officer with ATTOM Data Solutions, noted in a written statement that the numbers show the affordability gap “narrowing to the smallest point in more than two years.”
“All that may change in a huge way over the next few months as the impact of the coronavirus hits the housing market. We are entering a period of great uncertainty,” Teta said. “But in the initial months of the year, the picture has appeared to continue to brighten for home seekers.”
Cook County was one of 164 counties in the country where the a median-priced home was affordable for average wage earners in the first quarter of 2020. It was also one of 174 counties where average annualized wage growth is outpacing home price appreciation in Q1 2020.
Cook County also registered as one of the cities analyzed with more than 1 million people that were more affordable than their historic averages.
The report added that 288 (59.6%) of the counties analyzed require at least 30% of their annualized weekly wages in order to purchase a home.
More than two-thirds (66.9%) of the counties analyzed in the first quarter of 2020 were more affordable than their historic averages. That’s up from 55.1% in Q4 2019 and 49.7% in Q1 2019.
The report added that 160 (33.1) of counties with a population of at least 100,000 and at least 100 home sales in Q1 2020 are less affordable than their historic affordability averages. That’s down from 44.9% in Q4 2019 and 50.3% in Q1 2019.