Median home prices nationwide during the second quarter of 2017 were the least affordable in nearly nine years, according to ATTOM Data Solutions.
ATTOM’s Q2 2017 U.S. Home Affordability Index (HAI) for the second quarter of 2017 was 100, which is the lowest national affordability index since the third quarter of 2008.
“While home price appreciation in the second quarter accelerated to the fastest pace in more than three years, wage growth turned negative, posting the biggest year-over-year decrease in five years in Q4 2016 — the most recent average weekly wage data available,” ATTOM Data Solutions Senior Vice President Daren Blomquist said in a release.
“That combination of accelerating home price growth and slowing wage growth, along with mortgage interest rates that are up nearly 50 basis points from a year ago, eroded home affordability nationwide to the lowest level in nearly nine years, and pushed the highest share of markets beyond the threshold of normal affordability in nearly eight years,” Blomquist added.
The HAI found that the median home sales price nationwide in the second quarter of 2017 was $253,000, up 7.7 percent compared with a year ago. ATTOM said that is the biggest annual increase since the first quarter 2014.
At the same time that home prices are increasing, the average weekly wage nationwide was $1,067 during the fourth quarter 2016, which was the biggest annual decrease since Q4 2011. Nationwide, median home prices have increased 69 percent while average weekly wages have increased 9 percent during the same time period.
“All counties within the Seattle market area saw a sharp contraction in affordability between Q1 and Q2, which is disturbing,” Windermere Real Estate Chief Economist Matthew Gardner said.
“The local economy is firing on all cylinders but the number of homes for sale remains at almost historic low levels and this is putting intense upward pressure on home prices as demand far exceeds supply,” Gardner added.
In King County, Wash., for example, median home prices have increased 15 percent in the past year while wages have increased 3 percent.
“Unfortunately, I do not expect to see any substantial growth in the number of homes going on the market through the balance of 2017 and this will continue to erode affordability as buyers compete for the few homes that are available to them,” Gardner said.
The counties the HAI identified as having the lowest affordability indexes in the second quarter were Denver County, Colo.; Genesee County, Mich. (75); Adams County, Colo.; Arapahoe County, Colo.; and Weld County, Colo.
Other metro areas in the top 20 for lowest affordability indexes were Knoxville, Tenn.; Boulder, Colo.; Dallas; Saginaw, Mich.; Nashville; Austin, Texas; Portland, Ore.; Kennewick-Richland, Wash.; Lawrenceburg, Tenn.; New York; and Atlanta.
The HAI found that the Counties and metro areas where the highest share of average wages were needed to buy a home were Marin County, Calif.; Brooklyn N.Y.; Santa Cruz County, Calif.; Summit County, Utah; and Monroe County, Fla.
The report did identify markets where less than 25 percent of average wages were needed to buy a home during the second quarter. Those markets were Wayne County, Mich.; Philadelphia; Cuyahoga County, Ohio; Allegheny County, Pa.; and Saint Louis County, Mo.
“Ohio continues to be a very affordable housing market, even though we are seeing an overall statewide increase in housing prices,” HER Realtors Senior Regional Vice President Matthew Watercutter said.
“This increase is due to a lack of quality inventory, which causes multiple offers on homes and above asking offers in order for buyers to achieve an accepted offer very early in the marketing of new inventory,” Watercutter added.