By DON FENLEY
Data used to calculate Attom Data Solutions’ Q4 Home Affordability Index (HPI) in Sullivan and Washington counties has another story to tell. It paints a picture of both the fluctuation of payments for median-priced homes since 2013 – the year the local market recovered from the recession – and how much the income-to-housing has increased.
Here’s the benchmark for the income-to-housing ratio. As a general rule, housing should not exceed more than 30% of a person’s monthly gross income. For renters that 30% includes utilities. For owners, it included all other home-ownership costs like mortgage interest, property taxes and maintenance.
Since the recovery quarter (Q1, 20113) to Q4 2019, the average payment on a median-priced home in Sullivan increased from $460 a month to $779. During the same period, the average of $598 in Washington County increased to $842 a month.
During the same period, the cumulative inflation rate was 10%, according to the Bureau of Labor Statistics (BLS).
The average wage in Sullivan Co. increased 12.4% during the comparison period while the Washington Co. average wage increased by 13.7%.
The comparison shows how the home prices have outpaced wages growth in the region’s two largest county housing markets. But when you compare the most current average wage to the most current payment on a median-priced home you get a number that shows the two counties are still in the housing affordability range. That’s an assessment based solely on a statistical model. It doesn’t include the all-important inventory variable.
Those most current numbers show the average wage earner in Sullivan Co. would pay 20.6% of his or her gross income for housing. In Washington Co. the gross income to housing ratio is 26.1%.
The final comparison is the average gross income-housing cost ratio from the quarter when the market recovered from the recession to the most current quarter.
During Q1 2013 the wages to payment for a median-priced home was 13.7% in Sullivan Co. and 21.1% in Washington Co. So, the bottom line is the average wage earner paying for the median-price home in Sullivan Co. would be paying 6.9% more of his or her income for housing. In Washington Co. the increase is 5%. What isn’t included in this comparison is the increase in costs like mortgage interest, property taxes and maintenance for owners and utilities for renters.
Mortgage interest is the principal variance because utility rates, property taxes and maintenance costs tend to increase with inflation. Inventory is also a variable and the most current check of Attom’s affordable price-point against inventory shows only 18% of what’s on the market in Sullivan’s affordable range. In Washington Co. 26% of December listings were at or below that county’s affordable benchmark.
Categories: REAL ESTATE