By DON FENLEY
The good news is an average wage earner in Sullivan and Washington counties has the buying power to purchase a median-priced home. That means both counties are ranked as affordable housing markets in Attom Data Solution’s fourth-quarter Home Affordability Report.
The not-so-good news is 18% of the December listings in Sullivan, and 26% in Washington have a price that puts them in the affordable range. In other words, average wage earners in Sullivan can’t afford 82% of the homes on the market and 74% of those on the market in Washington.
The local situation isn’t quite as stark as what Attom found in 71% of the 486 counties in its most current analysis. In those 344 counties, median home prices were unaffordable for average wage earners.
Here’s how Attom determines affordability. Their number crunchers calculate 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 is then compared to annualized average wage data from the Bureau of Labor Statistics. The front-end debt ratio is sometimes called the mortgage-to-income ratio. It is computed by dividing the projected monthly mortgage payment by monthly gross income.
“Home prices rose across the country by 9% year-over-year in the fourth quarter, and the typical home remained a financial stretch for average wage earners. However, homes were actually a bit more affordable because of declining mortgage rates combined with rising pay to overcome the continued price run-up,” said Todd Teta, chief product officer with Attom. “As long as people are earning more money and shelling out less to pay off home loans, the market should remain strong with prices continuing to rise, at least in the near term. Those are big ifs, but for now this report offers some decent findings for both home seekers and home sellers.”
Much of Mr. Teta’s national assessment can be applied to the local market. Sullivan’s year-to-date average price in just south of the 9% national figure, but the same isn’t the case in Washington Co. So far this year, the average price is 0.4% higher than last year. That’s not what sellers want to hear, but it’s the reason Washington County’s Home Price Index (HPI) has been tracking positive when compared to the county’s historical affordability average this year. At the same time, Sullivan Co., which has enjoyed an increasing market share of single-family resales and some strong price growth, has seen its HPI dip below the HPI historical average for six straight quarters.
However, the local labor market is adding jobs, there’s been some wage improvement, and interest rates are still in record low range. That’s keeping the flame under the local market. Annualized November sales point to a single-family resale increase in the range of 7.5% this year. That would be the best annual sales increase since 2016 and the ninth straight year that resales have increased.
Attom’s analysis says the needed annual income needed to buy a home in Sullivan Co. was $33,403 and $36,070 in Washington Co. Remember that includes a 3% down payment and a maximum 28% front-end debt-to-income ratio.
The analysis included 3% wage growth in both counties.
The median home price growth for Sullivan was listed as 12%. It was down 1% in Washington Co. That set up the assessment that home prices in Sullivan Co. are increasing faster than wages, but not in Washington Co.
Attom’s data also shows that a Sullivan Co. buyer of an affordable home would spend 19% of his, or her, annualized wages on housing. In Washington Co., it 23.7%. Both are higher than the historical averages – 17.3% in Sullivan and 26.3% in Washington.
Categories: REAL ESTATE