Home prices increasing faster than wages in Washington, Sullivan counties, affordability down


What an example of a good news, bad news story? Try this one:

Housing affordability in Sullivan and Washington counties has decreased because home prices have grown much faster than wages. Washington County has been much harder on the wage growth scale than Sullivan County.


 

Kingsport-Bristol Jan. job, pay growth leads Tri-Cities

 

A comprehensive study by RealtyTrac shows the affordability index for Sullivan County is down 22% from its most affordable level in 2013. It’s down 12% in Washington County.

That doesn’t mean affordability is in the tank in either county. The index is still above the safety benchmark. But NE Tennessee’s two largest county housing markets are among those counties nationwide that are less affordable than their historically normal levels.

The report analyzed median home prices derived from publicly recorded sales deed data collected by RealtyTrac and average wage data from the U.S. Bureau of Labor Statistics in 456 U.S. counties. The affordability index was based on the percentage of average wages needed to make monthly house payments on a median-priced home with a 30-year fixed rate and a 3% down payment, including property taxes and insurance (see full methodology below).

Out of the 456 counties analyzed in the report, 43 counties (9%) had an affordability index below 100 in the first quarter of 2016, meaning buying a home was less affordable than the historically normal level for that county going back to the first quarter of 2005.

The Sullivan County affordability index in Q1 this year was 117, down from its peak of 150 during Q1 2013.

Washington County’s current index is 115, down from its Q1 2012 peak of 131.

“While the vast majority of housing markets are still affordable by their own historic standards, home prices are floating out of reach for average wage earners in a growing number of U.S. housing markets,” said Daren Blomquist, senior vice president at RealtyTrac. “The recent drop in interest rates has helped to soften the blow of high-flying price appreciation in some markets, but the affordability equation could change quickly if interest rates trend higher and home prices continue to rise faster than wages.”

The report shows the year-over-year median home price in Sullivan County is up 7% while the year-over-year wage growth is up 4%.

In Washington County the year-over-year median home price is up 6% and the year-to-year wage growth is 2%.

Nationwide home price growth is outpacing wage growth in 276 counties – 61% of the markets included in the study.

Report Methodology

The report analyzed median home prices derived from publicly recorded sales deed data collected by RealtyTrac and average wage data from the U.S. Bureau of Labor Statistics in 456 U.S. counties with a combined population of 221 million. The affordability index was based on the percentage of average wages needed to make monthly house payments on a median-priced home with a 30-year fixed rate and a 3% down payment, including property taxes, home insurance and mortgage insurance. Average 30-year fixed interest rates from the Freddie Mac Primary Mortgage Market Survey were used to calculate the monthly house payments. Only counties with a population of at least 100,000 and sufficient home price and wage data quarterly back to Q1 2005 were used in the analysis.

 

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