Affordable housing sees more downward pressure in Sullivan, Washington counties

The affordable housing status of Sullivan and Washington counties continued degrading during Q2, according to Attom Data Solution’s Home Affordability Report.

Both counties’ affordability indexes dropped below their historic affordability levels and Washington Co. gained the dubious distinction of being a market where the average wage earner could not qualify to buy a median-priced home.

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-price home. The calculation was based on assuming a 3% down payment and a 28% maximum front-end debt-to-income ratio. The required income was then compared to the annualized average weekly wage data from the Bureau of Labor Statistics (BLS).

Market forces in the Tri-Cities’ booming housing market and lagging wage growth are the primary drivers of the decrease in the region’s housing affordability status. Home prices in both counties have increased faster than wages – so have rents – for a couple of years.

During Q2, the percentage of a Washington County’s workers’ annualized wage required to buy a median-priced home was 28.8%, up from the county’s historic 26.4% level. The annual income needed to buy a median-priced home based on the 3% down, 28% debt-to-income ration during Q2 was $44,183. The annualized weekly wage in the county during the analysis period was $42,965.

In Sullivan Co., the benchmark was 21.4%, up from that county’s historic percentage of 17.4%. The annual wage needed to buy a Sullivan Co. median-priced home was $37,138, and the annualized weekly wage was $48,698.

The red-flag percentage of income spent on housing is 30%. That’s where owners and renters paying that much are classified as “housing stressed.”

These are two of the conditions that have pushed Sullivan Co’s. market share of existing home sales ahead of the region’s other city markets.

Another example of the slow upward increase in home prices can be found in June data.  Although resales in the $200,000 and below continue to dominate, the number of sales in the $200,000 to $399,999 price range have been inching higher.  During the 12 months ending on June 15, the $200,000 and below sales accounted for 66% of all resales. That’s down from the historical level of 72%. The market share for resales in the next higher price range has increased to 29%. That a 9% increase from the historical share. And if you look at the number of resales, those in the $200,000 to $399,999 increased more than those in the $200,000 and below for the first time.

One factor that has helped blunt the lack of affordability is record-low mortgage rates. That has exerted downward pressure on the monthly mortgage price, but it won’t last forever.

“The latest affordability numbers reveal a win-win situation for sellers as well as buyers. Prices are rising again around the country during the current home-buying season, despite worries that the economic impact of the Coronavirus pandemic would halt the nine-year runup in home values. But a combination of wage gains and declining mortgage rates are helping to override the increases and make homes more affordable in large swaths of the United States,” said Todd Teta, chief product officer with ATTOM Data Solutions. “Virus pandemic concerns are still quite valid and may show up in the coming months, which could hurt prices as well as affordability. That remains a significant potential cloud hanging over the market. But as of now, things are looking up for people on both sides

Nationwide, Attom’s Q2 report found that median home prices were more affordable than historical averages in 49% of the counties with enough data to analyze.

Categories: REAL ESTATE