Housing affordability dropped to an 11-year low in Sullivan County and a nine-year low Washington County during the last quarter of 2018. But even though homes were less affordable, Sullivan and Washington are still among five of the 13 Tennessee counties in Attom Data Solutions’ Q4 U.S. Housing Affordability Report where the average wage earner can afford to buy.
The affordability situation worsened in all the Tennessee counties during the last three months of 2018.
Nationwide, home affordability dropped to more than a 10-year low. The most current affordable index of 91 was down from the previous quarter and last year. Among the 469 counties analyzed in Attom’s report 357 (76%) had an index below 100. That means homes were less affordable than the long-term affordability averages the county. All Tennessee counties in the report had an index below 100.
The report calculates an affordability index based on a percentage of income needed to buy a median-priced home relative to historic averages, with an index above 100 indicating median home prices are more affordable than the historic average, and an index below 100 indicating median home prices are less affordable than the historic average. (See full methodology below.)
“While poor home affordability continues to cloud the U.S. housing market, there are silver linings in the local data as home price appreciation falls more in line with wage growth,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “Affordability improved from the previous quarter in more than half of all local markets, and one in five local markets saw annual wage growth outpace annual home price appreciation, including high-priced areas such as San Diego, Brooklyn, and Seattle.”
That relationship between home price appreciation and wage growth was best in Sullivan County where home prices were not rising faster in wages. The opposite was true in Washington County for the quarter.
Average wage earners in both counties could qualify for a mortgage if they had a credit rating and debt to income situations that passed muster for lenders.
It took 20.2% of the median wage in Sullivan during Q4 to buy a median-priced home compared to the historic wage share of 17.2%. The annual income needed to buy in Q4 was $34,495. That includes 3% down and 28% front-end debt to income. The median payment was $805.
In Washington County, the wages need to buy was 27.5% up from its historic share of 26.5%. The annual income – assuming 3% down and a 28% front-end debt ration – was $40,469. The median payment was $944.
Housing was most affordable in both counties during Q1 2013. The previous least affordable index for Washington County was Q3 2007. For Sullivan County, it was Q2 2006.
Attom’s Home Affordability Index analyzes 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. The affordability 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 percent 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.