Your inside source for real estate, development and construction information serving the counties of Mecklenburg, Union & Iredell VOLUME 107 NUMBER 43 ■ MECKTIMES.COM
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Home affordability gets even tougher across U.S. During third quarter as home prices and mortgage rates rise further ATTOM has released its third-quarter 2023 U.S. Home Affordability Report showing that median-priced single-family homes and condos are less affordable in the third quarter of 2023 compared to historical averages in 99 percent of counties around the nation with enough data to analyze. The latest trend continues a two-year pattern of home ownership getting more and more difficult for average U.S. wage earners. The report shows that affordability has worsened across the nation amid a third-quarter increase in home prices and home-mortgage rates that has combined to help push the typical portion of average wages nationwide required for major homeownership expenses up to 35 percent. The latest number is considered unaffordable by common lending standards, which call for a 28 percent debt-to-income ratio. It marks the highest level since 2007 and stands well above the 21 percent figure from early in 2021, right before homemortgage rates began shooting up from historic lows. Home ownership keeps getting tougher for buyers as average 30-year homemortgage rates in the U.S. have risen above 7 percent, from under 3 percent in 2021, and home prices have increased again in the third quarter of this year. The nationwide median price of single-family homes and condos is up 2 percent from the second quarter, to a new record of $351,250. Typical values around the country have gone up for two straight quarters, from a fallback that lasted from the middle of 2022 into early
2023 and threatened to end the extended boom that has buoyed the U.S. housing market for 11 years running. Those latest price and interest rate hikes, along with other forces, continue to push the typical cost of major ownership expenses up far faster than wages, resulting in declining home affordability. “The dynamics influencing the U.S. housing market appear to continuously work against everyday Americans, potentially to the point where they could start to have a significant impact on home prices,” said Rob Barber, CEO for ATTOM. “We clearly aren’t there yet, as the market keeps going up and the slowdown we saw last year looks more and more like a temporary lull. But with basic homeownership now soaking up more than a third of average pay, the stage is set for some potential buyers to be priced out, which would reduce demand and the upward pressure on prices. We will see how this shakes out as the peak 2023 buying season winds down.” Despite the ongoing path of affordability going against buyers, the forces creating that scenario remain in flux, which could push the trend up or down in the coming months. Home values are up, but at a typically modest third-quarter pace, and mortgage rates have started to settle down. At the same time, though, the stock market has fallen back in the past couple of months after a year of gains, and inflation has ticked upward after a year of declines. Those shifting sands both help and hurt the buying power of house hunters, which could send
affordability numbers in either direction. The report determined affordability for average wage earners by calculating the amount of income needed to meet major monthly home ownership expenses — including mortgage payments, property taxes and insurance — on a medianpriced single-family home, assuming a 20 percent down payment and a 28 percent 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 (see full methodology below). Compared to historical levels, median home prices in 574 of the 578 counties analyzed in the third quarter of 2023 are less affordable than in the past. That is up from 568 of the same group of counties in the second quarter of 2023 and 552 in the third quarter of 2022. It remains more than double the number that was less affordable historically two years ago. Meanwhile, major home-ownership expenses on typical homes are considered unaffordable to average local wage earners during the third quarter of 2023 in 457, or more than three-quarters, of the 578 counties in the report, based on the 28 percent guideline. Counties with the largest populations that are unaffordable in the third quarter are Los Angeles County, CA; Cook County (Chicago), IL; Maricopa County (Phoenix), AZ; San Diego County, CA, and Orange County, CA (outside Los Angeles). The most populous of the 121 counties
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“As an elite athlete, Jalin brings a winning spirit and unmatched dedication to his role as a license real estate professional.” Chad Osborne, Call It Closed International.
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