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Home prices driving local affordability lower

2-minute, 59-second read
Wages have increased in Sullivan and Washington counties, but not enough to keep up with housing prices. Median-priced single-family homes in both counties were less affordable in the third quarter compared to the historical average, according to the ATTOM Data Solution’s current Home Affordability Report.

The analysis shows the local pattern is manageable but getting less affordable. Both counties are ranked as affordable markets because the average worker has the buying power to purchase a median-priced home.

The analysis 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. It assumes 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.

Those assumptions are lending standards for affordability. But the average local down payment is closer to 10%, according to loan originators. And while the average buyer has enough purchasing power to buy a local median-priced home inventory in the core affordability range for both counties is between 12% and 13% of the active listings.

Washington Co.’s affordability decline began during the second quarter of this year. Sullivan Co.’s index has been in the less affordable range for every report since the first quarter of 2018.

Nationwide, median-priced single-family homes were less affordable in 75% of the 572 counties analyzed.

According to the analysis, home prices have continued rising in most of the country for the 10th straight year as a glut of home buyers chase a tight supply of homes for sale made even worse by the pandemic. The surge has come amid historically low home-mortgage rates and a desire of many households, largely unscathed financially by the crisis, to seek the relative safety of a house or condominium and space for developing work-at-home lifestyles. Mortgage rates below 3% throughout most of the past year have helped offset the impact of rising prices, but not enough to prevent the cost of homeownership from getting closer to the unaffordable benchmark.

“The typical median-priced home around the U.S. remains affordable to workers earning an average wage, despite prices that keep going through the roof. Super-low interests and rising pay continue to be the main reasons why,” said Todd Teta, chief product officer with ATTOM. “But affordability keeps inching in the wrong direction as the housing market boom keeps roaring ahead. That’s pushing average workers closer and closer to the point where lenders might be reluctant to give them a mortgage. With much still uncertain about how the pandemic and many other forces could still affect the economy, affordability remains a crucial measure of market stability that could easily keep going in the same direction or swing back the other way.”

SULLIVAN COUNTY

August’s median price was $205,000, up 17.2% from last year. So far this year, it’s up 14.5% from the first eight months of last year. Local wages have increased 7% since the third quarter of last year.

The annual income needed to buy a median-priced home based on the analysis assumption is $29,319. That accounts for 15.7% of the buyer’s annualized wages. The income share to buy is 3% higher than Sullivan’s historical average.

Housing was most affordable in Sullivan during the first quarter of 2013. At that time, buying a median-priced home required 9% of the buyer’s annual income.

Availability is as much of a challenge for affordable home shoppers as cost. During August, 37 of the county’s 300 active listings were in the affordable price zone.

WASHINGTON COUNTY

August’s median price was $239,950, up 10.9% from last year and 13.5% from the first eight months of last year. Wages have increased 8% since the third quarter of last year.

The annual income needed to buy is $35,620. That accounts for 21.4% of the buyer’s income and is 2.3% higher than the county’s historic most affordable level. Homes in Washington Co. were most affordable during the first quarter of 2012 when the accounted for 14.5% of the buyer’s annual income.

There were a little more than 40 of the county’s 294 active listings in the affordable zone during August.

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