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Sullivan, Washington affordable housing indexes trend lower

The good news is Sullivan and Washington counties are affordable housing markets.  But affordability involves much more than just what homes sell for. The standard for affordability is a worker making the local median wage, having good credit, the recommended debt-to-income ratio, and a 20% down payment can afford a median-priced home.

The other side of the story is accessibility is more of an issue than affordability. Fewer than 16% of the existing homes currently listed for sale are in the affordable range. At the same time, the financial comfort zone continues shrinking as home prices increase faster than wages and rising mortgage rates erode consumers’ buying power. And the Number 1 challenge mortgage originators have is getting the people who want to buy a home qualified for a loan.

According to ATTOM Data Solution’s fourth-quarter Home Affordability Report, 77% of the median-priced single-family homes are less affordable when compared to their historical averages. That’s the highest point in 13 years as home prices continue rising faster than wages throughout the county.

The report determined affordability for average wage earners by calculating the amount of income needed to meet major monthly homeownership expenses — including mortgage, property taxes, and insurance — on a median-priced single-family 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.

Only two local counties had enough data to be included in ATTOM’s analysis.

SULLIVAN Co.

The last three months of 2021 marked the 15th straight quarter that Sullivan’s median-priced homes were less affordable than the county’s historical average. That most affordable average was the first quarter of 2013, when the median price was $80,000. Since then, it has increased to $180,000. That means half of the 569 fourth-quarter sales were for $180,000 or less, and half were for more.

The Q4 qualifying income to buy one of the median-priced homes was $30,602. That accounted for 16.1% of the buyer’s income. That’s a total that’s well within the 30% benchmark for homeownership before their finances become “housing burdened.”

The current Sullivan Co. home affordability index is at a 16-year low.

WASHINGTON Co.

Housing in Washington Co. is more expensive than it is in Sullivan. But its housing affordability index has consistently outperformed Sullivan Co. Housing has been on a less affordable tend path for the past three quarters.

The fourth-quarter median sales price for the 595 existing home sales was $210,000. That’s $110,000 more than it was during the county’s most affordable quarter (Q1 2012).

Currently, the qualifying income for a median-priced Washington Co. home is $36,271. That puts the owner’s housing cost at 21.5% of his or her income.

Home prices are increasing in both counties faster than wages.

AFFORDABILITY PATTERN

Local homes priced in the affordability range are still manageable but getting less affordable.

That’s the same national assessment in ATTOM’s analysis. And it has resulted in major ownership costs on the typical home consuming 25.2% of the national average wage.

“The average wage earner can still afford the typical home across the United States, but the financial comfort zone continues shrinking as home prices keep soaring and mortgage rates tick upward,” said Todd Teta, chief product officer with ATTOM. “Historically low rates and rising wages are still big reasons why workers can meet or come very close to standard lending benchmarks in a majority of counties we analyze. But the portion of wages needed for major ownership expenses nationwide is getting closer to levels where banks become less likely to offer home loans. Amid very uncertain times, with the pandemic again threatening the economy, we will keep watching this key measure of housing market stability.”

Meanwhile, CoreLogic’s Home Price Index for the three-county Johnson City metro area of Carter, Washington and Unicoi counties was up 21.3% from last year.

Kingsport-Bristol had a 22.04% increase. The Kingsport-Bristol metro area included Hawkins and Sullivan counties in NE Tenn. and Scott and Washington counties in SW Va.

Home sales and prices began their current rapid growth pattern in 2015. Housing affordability has eroded since peaking in the first quarter of 2016. Although Washington County is a more expensive housing market its Home Price Index has consistently outperformed Sullivan Co. during that period. Index levels below 100 (black line) indicate less affordable that the county’s historical average.

 

 

 

 

 

 

 

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