Analysis of the housing market shows that housing affordability shrank again in 2021, though the average wage earner in most U.S. counties can still afford to buy.
The National Association of Realtors’ December Housing Affordability Index shows that surging demand for a very limited inventory of homes is fueling higher home prices, resulting in a shrinking financial “comfort zone” for many home buyers.
In October, mortgage payments rose by 3.1% while the median family income increased by just 0.7%.
Even so, the average wage earner in the U.S. can afford a typical home, reveals a new report from ATTOM Data Solutions. However, the financial comfort zone is shrinking as home prices keep growing and mortgage rates slowly rise.
“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 analyse,” said Todd Teta, chief product office at ATTOM.
The report found that homeownership expenses for a typical home are still affordable to average wage earners in around half of the 575 counties surveyed in ATTOM’s report. However, it’s believed that affordability is declining. In the fourth quarter, median single-family home prices rose 10% in 64% of those tracked counties. Those home price gains are outpacing wage growth in most markets.
ATTOM said the most affordable markets to buy a home include Schuylkill County, Pa. (outside Allentown), where workers must spend 6.5% of their annualized weekly wage to afford a home. That’s followed by Macon County, Ill. (Decatur) at 9.2%, Bibb County, GA. (Macon), at 9.5%, Wayne County, Mich. (Detroit) at 10.6% and Peoria County, Ill. at 11.3%.
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