Higher prices erode Sullivan, Washington housing affordability status

The downside of a hot housing market with rising prices is often a loss in affordability. Sullivan and Washington counties are in that boat. During Q3, housing was less affordable than the previous quarter and last year. But both also maintained their status as affordable markets, according to ATTOM Data Solutions Q3 Housing Affordability Report.

ATTOM’s analysis found that median home prices of U.S. single-family homes and condos during Q3 were less affordable than historical averages in 86% of counties with enough data to analyze – up from 54% a year ago.

SULLIVAN CO.

The average Sullivan Co. wage owner needed an annual income of $28,549 to buy a median-priced home during Q3. Buying that home would take 16.4% of his or her annualized wages, up from 15.3% during Q1 2013 – the historic percentage of wages to buy.

Accessibility is more of an issue due to a record low inventory of home for sale, and the trend has been moving toward homes above the affordability range.

Sullivan’s home prices have increased faster than wages, which has eroded affordability. When compared to Q3 last year, the median sales price has increased by 3%, while annual wage growth is down 1%.

Sullivan’s affordability index has been less affordable than the county’s historical average for the last 10 quarters.

WASHINGTON CO.

A median-priced home in Washington Co. required 22.7% of the average wage earner income, down from the historic percentage of 22.9%.

Like Sullivan Co., home prices in Washington Co. have increased faster than wages. The year-over-year median price during Q3 was down 3% while wage growth was up 2%.

Availability is also an issue in Washington Co. due to low inventory, and – like Sullivan – the local trend has been moving toward homes above the affordable price range.

Washington Co.’s affordability index has been slightly above the historical average for the last year. That will change when the Q4 data is crunched because Washington Co. and Johnson City prices are making a strong rebound when compared to price performance earlier this year.

CALCULATING AFFORDABILITY

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, assuming a 20% 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.

U.S. AFFORDABILITY

Compared to historical levels, 308 of the 487 counties analyzed in the third quarter are now less affordable, up from 262 of the same group of counties in the third quarter of 2019. The fallback has come as spikes in single-family home prices – occurring despite economic troubles related to the ongoing Coronavirus pandemic – have outpaced the impact of increasing wages and declines in mortgage rates to historic lows.

Amid those trends, costs associated with median-priced homes are unaffordable for average wage earners in 61% of the counties in the report during the third quarter of 2020. That means that those expenses consume more than 28% of average wages from county to county across the nation.

“In a year when nothing is normal, owning a single-family home has become less affordable to average wage earners across the U.S., despite conditions that would seem to point the opposite way,” said Todd Teta, chief product officer with ATTOM Data Solutions. “Wages are up, and mortgage rates are down to rock-bottom levels, which should work in favor of home buyers. On top of that, the American economy has suffered greatly since the Coronavirus pandemic began surging over the Winter – a plight that normally would drop home demand and home prices. But those same low mortgage rates, along with other factors, have led a lot of buyers into the market chasing a reduced supply of homes. The result is price hikes have raced past the impact of wages and mortgage rates.”

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Categories: REAL ESTATE

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