Sullivan, Washington counties’ housing still affordable but losing ground

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Average workers in NE Tenn.’s two largest housing markets can manage the major expenses of homeownership based on lender standards. But Sullivan and Washington counties are among the U.S. markets where things have gone in the wrong direction as the housing market roars onward.

For the moment, the local situation is a mix of positive and negative trends.

Affordability was below Sullivan’s historical level for the 15th straight quarter during Q2. It dipped into less affordable status after two improving quarters in the equally hot – and more expensive – Washington Co. market, according to ATTOM Data Solutions Home Affordability Report.

ATTOM’s report determined affordability for average wage earners by calculating the amount of income needed to meet monthly homeownership expenses — including mortgage, property taxes and insurance — on a median-priced single-family home. The calculation assumes a 20% down payment and a 28% maximum “front-end” debt-to-income ratio. That required income was compared to annualized average weekly wage data from the Bureau of Labor Statistics (BLS).

Washington Co.’s median sales price ($220,000) was 38% higher than last year, and the average wage increased 8%. It took an average of 22.8% of the average workers’ salary to buy. The county’s historical average is 19.1%. Assuming a 20% down payment and 28% front-end debt-to-income ratio, $37,664 is the annual income needed to buy a median-priced home.

Sullivan’s $164,850 median sales price is up 19% percent while the average wage increased 4%. According to the analysis, it took an average of 15.8% of an average worker’s wages to buy. The county’s historical average is 12.8%. The annual income needed to buy in Sullivan Co. was $28,231.

The affordability index for Washington Co. was down 22% in the second quarter. It was down 11% in Sullivan Co.

The price of homes is increasing faster than wages in NE Tenn. Availability is also an issue. During June, there were 12 homes at or just under the Washington Co. affordable price range and 30 at or just above in the Sullivan Co. affordable range.

“While super-low mortgage rates have certainly helped in a big way, prices have simply shot up too much to maintain historic affordability levels. The near future of affordability remains very uncertain, as it has throughout the pandemic,” said Todd Teta, ATTOM’s chief product officer.

The median Sullivan Co. mortgage payment on a median-priced home was $659 during the second quarter. That’s 16% higher than last year. It was 34% higher ($879) in Washington Co.

Both local markets, and most of those in the ATTOM analysis, still require less and 28% of wages to buy a median-priced home. The benchmark for the share of income to housing costs is 30%.

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