Washington County had the best housing affordability index performance in Tennessee during the first three months of this year. Washington and Williamson were the only counties in ATTOM Data Solution’s Q1 analysis with indexes that show housing more affordable than their historic average.

The average payment for a median-priced home in Sullivan and Washington counties has spiked 58.7% and 43.9% since both counties’ median-priced homes were most affordable. The mix of rising wages and bargain-basement mortgage rates has helped keep prices affordable for average wage earners.

The bottom line is the average worker in both Tri-Cities counties had sufficient buying power to purchase a median-priced home in the Q1 analysis. The challenge is the inventory of those median-priced homes has declined, and competition for one of them gets tougher every month.

At the end of Q1, Washington County’s median-priced homes have been more affordable than its best-ever index for seven months.

Sullivan’s has an opposite track record. Its index has been higher than its best affordability level for 12 straight quarters. But the trend is slowly improving.

ATTOM’s analysis determined affordability by calculating the amount of income needed to buy a median-priced home, meet monthly ownership expenses — including mortgage, property taxes, and insurance. The required income was then compared to annualized average weekly wage data from the Bureau of Labor Statistics (BLS).

Sullivan and Washington were the only NE Tenn. counties with enough data to be included in the analysis. The benchmark was a population of 100,000 or more and 50 or more sales during the first quarter.

“The past year certainly has been an odd one for the U.S. housing market. Home prices surged at a remarkable pace even as the virus pandemic damaged the U.S. economy, which dropped historical affordability levels. But average workers untarnished by the pandemic were still able to afford the typical home because wages and rock-bottom interest rates worked to their favor in a big way,” said Todd Teta, chief product officer with ATTOM. “Much remains uncertain about the housing market in 2021. A lot will depend on how well the broader U.S. economy recovers from the pandemic and whether there are still many more buyers looking to escape congested neighborhoods most prone to the virus, pushing prices even higher. But for now, our data shows that average workers can manage the costs associated with rising values.”

The median prices used in ATTOM’s analysis are lower than those reported by the Northeast Tennessee Association (NETAR) because ATTOM uses publicly recorded sales deed data for their median price while NETAR’s data is the sales price for homes listed on the Multiple Listing Service. NETAR’s data typically accounts for about 75-80% of local arms-length home sales.

According to ATTOM, Sullivan home prices continue to outpace wages. During the first three months of last year, wages were up 2% while the median home price was 5%. But the all-import percentage of wages to afford a median-priced home was 13.4%, down from 17.3% during Q4 last year.

In Washington Co. prices are not outpacing home prices. During Q1, home prices increased 2% while wages were up 5%. The average worker was spending 17.2% of his or her wages on housing, down from 21.9% in Q4.

A comparison to the 23.7% wage share nationwide illustrates the affordability of local housing.

Williamson Co. had the highest qualifying income in the state at $86,064. Sullivan Co. had the lowest.

ATTOM’s benchmark for a qualifying income was a 20% down payment and a 28% front-end debt-to-income ratio.

Categories: REAL ESTATE