By DON FENLEY

TRI-CITIES, Tenn. – Washington Co. got a lump of coal in its Christmas housing affordability stocking. It dropped further into the “not affordable” category in the ATTOM Data Solutions Q4 Home Affordability Report. The county’s affordability status began its downward arch in the second quarter of 2021. It dipped below the affordable line in the second quarter of 2022.

Although Sullivan Co. has not crossed that benchmark, it’s on the same trajectory as its neighbor to the north.

The Tri-Cities’ two largest housing markets are in the same boat as 99% of the counties across the nation – far above the 58% that were less affordable in the fourth quarter of 2021.

Local affordability has worsened due to rising home-mortgage rates that offset the benefits of rising wages. Nationwide, those higher loan rates have pushed up major ownership expenses on median-priced homes by 10% this quarter, even though the median price of single-family homes and condos nationwide dipped by 3% this quarter. Locally, Sullivan Co.’s median price was down 4% in the last quarter. It was down 2% in Washington Co. But lower prices and a 1% gain in average U.S. wages have been too little to make up for the impact of higher mortgage rates. The average wage gain in Washington Co. was 1.2%. It was 0.7% in Sullivan.

“Prospective homebuyers – especially first-time buyers – can’t seem to catch a break,” said Rick Sharga, executive vice president of market intelligence at ATTOM. “For the past two years, home prices have been appreciated in double digits – 15 to 20% a year in some markets. Now that home prices have plateaued and even declined in some markets, buyers are faced with mortgage rates that have doubled, making home purchases even less affordable.

“There is a scenario where affordability improves as we move through 2023,” Sharga added. “Wage growth continues to be strong; home prices appear to have stabilized and are even going down slightly; and mortgage rates may have peaked for this cycle and could go down gradually next year. If those conditions remain in place, the affordability picture is much brighter for a lot of potential buyers.”

ATTOM’s affordability benchmark is based that the buyer making a 20% down payment, which is not the average in either local county. The assumption also includes 0.35% of the home’s value for insurance and 0.85% of the loan’s value for Private Mortgage Insurance (PMI)

Based on those assumptions, Washington Co’s average Q4 mortgage payment is $1,389. That is 60% higher than it was last year.

The average in Sullivan Co. is $1,078, up 53% from last year.

Another affordability calculation can be based on the percentage of a buyer’s income for housing. The affordability benchmark is $25. By that standard, affordability in Washington Co. would be $1,042 and month and $1,201.15 in Sullivan.

The current percentage of wages to buy in Sullivan Co is 22.4%, up from its historic low of 13%.

The percentage to buy in Washington Co. is 33.3%, up from its historic low of 14.2%. Washington’s percentage to buy moved into the unaffordable range during the second quarter of this year when it was 30.2%. In the third quarter, it was 30.1%.

Based on its assumptions, Washington Co.’s affordability numbers mean that the average wage earner cannot qualify to buy a median-priced home in the county. Homes are still selling. In fact, the sales rate is about what it was before the pandemic.

©2022 donfenley.com

Categories: REAL ESTATE