By DON FENLEY
TRI-CITIES, Tenn. – Washington County’s housing affordability index improved during the first three months of this year while Sullivan County lost ground. While many locals lament the lack of affordable housing, a comparison with other state counties and the U.S. numbers using ATTOM’s first quarter Home Affordability Report tells a different story. That story’s bottom line is while local prices have increased, local housing data is still sending out a strong “Best Buy” signal across the state and US when price is the determining factor.
ATTOM is a leading curator of land, property, and real estate data.
The reason Washington Co. improved was a 6% quarterly decline in the median home price and a 2% increase in its year-over-year annualized wage. That pushed the county’s percentage of wages needed to buy a median priced home from 33.3% during the Q4 last year to a current 27.1% level. In short, county home prices didn’t increase faster than wages.
The downside to the Washington Co. story is an average wage earner still doesn’t have the buying power to purchase a median priced home. The opposite is the case in Sullivan Co. even though its affordability index has declined for the past eight quarters.
ATTOM’s report shows the median home price growth in Sullivan Co. was 17% while declining 6% in Washington County. The annual income needed to buy was $43,896 in Sullivan and $51,467 in Washington, Co. The annual year-over-year annualized wage growth in both counties was 8% and the percentage of income needed to buy in Sullivan was 21.6% and 27.1% in Washington.
Yes, housing is still more expensive in Washington Co., but Sullivan is closing the gap.
So, why is the data sending a “Best Buy” signal?
Sullivan County’s annual income needed to buy the lowest among Tennessee counties in the report and almost $35,000 below the national benchmark. The income benchmark assumes the buyer puts 20% down and has a 28% front-end debt-to-income ratio. A good credit rating is also assumed.
Although Washington Co. doesn’t have the lowest income benchmark to buy in the state, it’s $21,315 below the U.S. benchmark.
“The soaring housing market has finally come back down in much of the U.S., at least for now, while worker pay is growing. That’s produced some benefits for home seekers in the form of slightly better affordability, especially as lending rates have flattened out,” said Rob Barber, chief executive officer for ATTOM. “Things certainly haven’t swung way back into friendly territory. Price drops and wage gains haven’t yet translated into equal improvements in affordability. And the trend could go back the other way if interest rates go up again, as expected. But the scenario is becoming more favorable for buyers.”
With multiple uncertain economic forces at work, the market could continue sliding or turn back upward this spring and summer, according to ATTOM. “That, along with the path of wages, will dictate whether home ownership continues to grow more affordable after a gradual path the other way over the past few years.
ATTOM calculates affordability for average wage earners with the amount of income needed to meet major monthly income ownership expenses – including mortgage, property taxes and insurance – on a median-priced, single-family home or condo. The calculation assumes a 20% down payment and a 28% maximum front end debt-to-income ratio. That required income is then compared to annualized average wage data from the Bureau of Labor Statistics.
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