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Local housing barely below or just over affordable benchmark

By DON FENLEY

TRI-CITIES, Tenn. – Home affordability is just out of reach or barely in reach in Sullivan and Washington counties, according to ATTOM Data solution’s third quarter Home Affordability Report.

Affordability continued declining in both of Tri-Cities’ two largest markets during the third quarter and is not following the national trend toward some slight relief for potential buyers.

Sullivan Co.’s affordability has declined since the second quarter of 2018. It has receded for the last six quarters in Washington Co. And, for the second quarter, the average Washington Co. worker doesn’t have the buying power to purchase a median-priced home.

Nationwide median-priced single-family homes and condos remain less affordable in 99% of the U.S. counties with enough data to analyze, according to ATTOM Data Solutions Home Affordability Report. This time last year, it was 69% of counties. It also has the worst affordability rating, the 11-year housing market boom.

“Homeownership remains largely unaffordable for the majority of homebuyers in the majority of markets across the country,” said Rick Sharga, executive vice president of market intelligence at ATTOM. “While home prices have declined a bit quarter-over-quarter, they’re still higher than they were a year ago, and interest rates have essentially doubled. Many prospective homebuyers simply can’t afford the home they hoped to buy, and in many cases no longer qualify for the mortgage they’d need.”

Unlike prices in the metros cited by Sharga, they have not declined in the Tri-Cities. The median sales price has been flat for three months but is at an all-time high. So, the local affordability status isn’t showing signs of improvement that the U.S. index.

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. that financing model doesn’t fit the typical way locals are buying. Down payments are in the 6% to 8% range, which means private mortgage insurance (PMI) is added to the mortgage.

The local affordability crunch is driven by higher mortgage rates that have increased the typical house payment by 60% this year, stubborn price levels that have so far not yielded to downward pressures, and wages that haven’t kept pace with home price increases. The region also has a housing shortage.

The percentage of annualized wages needed to buy a median-priced home in Sullivan Co. is 21.7%, up slightly for the second quarter. The affordability benchmark is no more than 25% for housing. In Washington Co., the percentage is 30.1%. The benchmark where a owners entered stressed housing status is 30%.

According to ATTOM, the typical mortgage payment in Sullivan is $1,035. In Washington Co., it was $1,240.

Applied to the current local median household incomes, here’s the 30% affordability target for local major city markets.

  • Bristol – $1,052
  • Elizabethton – $950
  • Greeneville – $1,026
  • Johnson City – $1,054
  • Kingsport – $1,052

©2022 donfenley.com

 



Categories: REAL ESTATE

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