Housing affordability improved in Sullivan County during the first quarter of this year and slipped in Washington County. The local counties were among the 142 counties in Attom Data Solution’s Q1 Home Affordability Index (HAI) where median prices affordability improved. That wasn’t the case in 68% of the 446 counties studies in the report.

Both Sullivan and Washington had a Q1 HAI that shows housing is now more affordable than either county’s historic index average. Sullivan County slipped below that benchmark in Q4 – the only quarter where the index showed less affordable conditions in 2017.

Attom determines affordability for average wage earners by calculating the amount of income needed to make monthly house payments — including mortgage, property taxes, and insurance — on a median-priced home, assuming a 3% down payment and a 28% maximum “front-end” debt-to-income ratio. That required income was then compared to annualized average weekly wage data from the Bureau of Labor Statistics. The full methodology is at the bottom of this report.

During Q1 Sullivan County’s index was 102. It was 105 for Washington County. An index below 100 housing was less affordable than the county’s historic average. Sullivan County has its best index last year during Q1 when it was 107. Washington County’s best index last year was 121 in Q1. Both counties had their most affordable index in Q1 2013 when Sullivan rated a 137 and Washington had a 133.

According to the report, the year-over-year median price for a home in Washington County was $139,900, up 18%, and $109,000 in Sullivan, up 8%.

The annual income needs to buy a median-priced home after a 3% down payment and a 28% front-end debt to income ratio was $37,050 in Washington County and $28,600 in Sullivan County.

Annualized wage growth was 2% in Washington County, and 1% in Sullivan County and home prices are appreciating faster than annualized wages in both counties.

What the percentage of annualized wages need to buy was 25.8% in Washington County and 17.4% in Sullivan.

Nationwide Attom’s report found that Q1 median home prices were not affordable for average wage earners in 304 of the 446 counties studied in the report. Sullivan and Washington’s counties were the only Tri-Cities counties in the report. Knox was the only other Northeast Tennessee county in the report. It had a Q1 HAI of 112, and the median sales price was $155,000. The annual income needed to buy that median-priced home was $41,871. And like Sullivan and Washington counties, home prices in Knox is increasing faster than wages.

“Coastal markets are the epicenter of the U.S. home affordability crisis, but affordability aftershocks are now being felt further inland as housing refugees migrate from the high-cost coastal markets to lower-priced markets in the middle of the country where good jobs are available,” said Daren Blomquist, senior vice president with ATTOM Data Solutions. “That, in turn, is pushing home prices above historically normal affordability limits in those middle-America markets.”

Attom’s index analyzes median home prices derived from publicly recorded sales deed data collected by Attom Data Solutions and average wage data from the  U.S. Bureau of Labor Statistics in 446 U.S. counties. The affordability index is based on the percentage of average wages needed to make monthly house payments on a median-priced home with a 30-year fixed rate mortgage 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 sufficient home price and wage data quarterly back to Q1 2005 were used in the analysis.

The report determined affordability for average wage earners by calculating the amount of income needed to make monthly house payments — including mortgage, property taxes, and insurance — on a median-priced home with, assuming a 3%t down payment and a 28% maximum “front-end” debt-to-income ratio.

For instance, the nationwide median home price of $229,500 in the first quarter of 2018 would require an annual gross income of $57,009 for a buyer putting 3% down and not exceeding the recommended “front-end” debt-to-income ratio of 28% — meaning the buyer would not be spending more than 28% of his or her income on the house payment, including mortgage, property taxes, and insurance. That required income is higher than the $54,847 annual income earned by an average wage earner based on the most recent average weekly wage data available from the Bureau of Labor Statistics, making a median-priced home nationwide not affordable for an average wage earner.

Categories: CORE DATA, REAL ESTATE