Property data curator ATTOM released its fourth-quarter 2024 U.S. Home Affordability Report, showing that median-priced single-family homes and condos remain less affordable in the fourth quarter of 2024 compared to historical averages in 98 percent of counties around the nation with enough data to analyze.
The latest trend continues a three-year pattern of home ownership requiring historically large portions of wages as U.S. home prices keep reaching new heights.
Data also shows that major expenses on median-priced homes currently consume 34 percent of the average national wage. That level marks an increase of more than one percentage point both quarterly and annually, pushing the figure even farther above the common 28 percent lending guideline preferred by lenders.
“The U.S. housing market continues to generate great profits for most home sellers but also more and more financial stress for would-be buyers,” ATTOM CEO Rob Barber said in a release. “Average workers now must shell out a larger portion of their wages for major home-ownership expenses than at any time since right before the housing market tanked in the late 2000s. Despite recent declines in mortgage rates, down payments on typical home purchases have reached four times the average national wage.
“At some point, something’s got to give, or a growing number of buyers will have no choice but to toss in the towel and wait for home ownership to become more affordable. But we clearly are not there yet.”
Downturns in current and historic affordability represent the latest measures of how home ownership remains a financial stretch for average workers around the nation. They come as the national median home price has climbed to $364,750 this quarter and mortgage rates, while declining, remain over 6 percent. Combined, those forces are helping to keep the ratio of ownership expenses to wages in the unaffordable range.
Fourth-quarter trends also have reversed a slight improvement during the third quarter of this year that had signaled a possible step in the right direction for homeowners. The portion of average wages nationwide required for typical mortgage payments, property taxes and insurance now stands almost 13 points beyond a low point reached early in 2021, right before home-mortgage interest rates shot up from the lowest levels in decades, ATTOM added.
The latest numbers reflect yet another period when year-over-year changes in major expenses on typical single-family homes and condos have outrun changes in average wages around the country. Expense totals have either grown faster or declined less than wages during 14 of the last 15 quarters dating back to late 2020, pushing affordability in the wrong direction for house hunters.
The report determines 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 median-priced single-family home and condo, assuming a 20 percent down payment and a 28 percent maximum “front-end” debt-to-income ratio. That required income is measured against annualized average weekly wage data from the U.S. Bureau of Labor Statistics.
Compared to historical levels, median home ownership costs in 556 of the 566 counties analyzed in the fourth quarter of 2024 are less affordable than in the past. That is virtually unchanged from both the third quarter of 2024 and the fourth quarter of 2023, according to ATTOM.
Historic measures remain negative as the portion of average local wages consumed by major home-ownership expenses on typical homes are considered unaffordable during the fourth quarter of 2024 in about 70 percent of the 566 counties in the report, based on the 28 percent guideline. Counties with the largest populations that are unaffordable in the fourth quarter are Los Angeles County, Calif.; Maricopa County, Ariz. (Phoenix); San Diego County, Calif.; Orange County, Calif. (outside Los Angeles) and Miami-Dade County, Fla.
On the flip side, the most populous of the counties with affordable levels of major expenses on median-priced homes during the fourth quarter of 2024 are Cook County, Ill. (Chicago); Harris County, Texas (Houston); Wayne County, Mich. (Detroit); Philadelphia County, Pa., and Cuyahoga County, Ohio (Cleveland).