Median-priced single-family homes and condos are less affordable in Q4 2022 compared to historical averages in 99% of counties, far above the 68% of counties in Q4 2021, according to a new report from ATTOM.
ATTOM’s Q4 2022 Home Affordability Report found that the portion of average wages nationwide required for typical major home-ownership expenses has risen to 32.3% this quarter. That figure – considered unaffordable by traditional lending standards – is up from 29.6% last quarter and from 23.8% last year, and it now stands at its highest point since 2007.
Compared to historical levels, the report found that median home prices in 577 of the 581 counties analyzed are less affordable than in the past, up slightly from the 572 last quarter but well up from the 393 last year.
Meanwhile, ATTOM stated that major home-ownership expenses on typical homes are unaffordable to average local wage earners in 427, or about three-quarters, of the 581 counties, based on the 28% lending guideline. Counties with the largest populations that are unaffordable are Los Angeles County, California; Maricopa County, Arizona; San Diego County, California; Orange County, California and Kings County, New York. The most populous of the 181 counties where major expenses on median-priced homes remain affordable are Cook County, Illinois; Harris County, Texas; Wayne County, Michigan; Philadelphia County, Pennsylvania and Cuyahoga County, Ohio.
Key highlights:
- Median single-family home and condo prices remain up by at least 5% over last year in 361, or 63%, of the 581 counties. However, typical values have dropped from Q3 to Q4 in 463, or 80%, of those counties. That has contributed to a nationwide 3% decrease in the median home price, from $335,000 last quarter to $325,000 now. The median is now down 6.9% from the peak of $349,000 in Q3 2022.
- Among the 48 counties in the report with a population of at least 1 million, the biggest YoY gains in median sales prices are in Collin County, Texas (+34%); Hillsborough County, Florida (+18%); Miami-Dade County, Florida (+17%); St. Louis County, Missouri (+16%) and Palm Beach County, Florida (+16%).
- Counties with a population of at least 1 million where median prices have dropped most, YoY, are Philadelphia County (-13%); New York County, New York (-4%); Honolulu County, Hawaii (-4%); Bronx County, New York (-1%) and Santa Clara County, California (-1%).
- Annual home-price appreciation has surpassed weekly annualized wage growth in 327 of the 581 counties analyzed in the report (56%), down from 84% last quarter. The latest group where price gains are outpacing wage gains includes Kings County, Miami-Dade County, Dallas County, Texas; Queens County, New York and Clark County, Nevada.
- Average annualized wage growth has surpassed YoY home-price appreciation in 254 of the counties in the report (44%), up from 16% of counties last quarter. The latest group where wages are going up faster than prices include Los Angeles County, Cook County, Harris County, Maricopa County and San Diego County.
- The portion of average local wages consumed by major expenses on median-priced, single-family homes and condos has increased from Q3 to Q4 2022 in 97% of the 581 counties. The amount needed now tops the 28% lending guideline in 427, or about three-quarters of those counties, assuming a 20% down payment.
- Counties with the largest quarterly increase in the portion wages needed for major ownership expenses are Santa Cruz County, California (up from 105.3% to 124.7%); Maui County, Hawaii (up from 89.5% to 104.3%); Beaufort County, South Carolina (up from 54.2% to 68 9%); Gallatin County, Montana (up from 54.5% to 67.3%) and Alexandria City County, Virginia (up from 42.8% to 55.2%).
- Those that require the largest percentage of wages are Santa Cruz County (124.7%); Kings County (114.6%); Marin County (109.6%); Maui County, Hawaii (104.3%) and San Luis Obispo, California (94.2%).
- Aside from Kings County, counties with a population of at least 1 million where major ownership expenses typically consume more than 28% of wages include Queens County, New York (82.7%); Orange County (82%); Alameda County, California (74.8%) and Nassau County New York (72%).
- Counties where the smallest portion of wages are required to afford the median-priced home are Macon County, Illinoia (12%); Schuylkill County, Pennsylvania (12.8%); Peoria County, Illinois (13.5%); St. Lawrence County, New York (13.6%) and Cambria County, Pennsylvania (14.1%).
- Counties with a population of at least 1 million where major ownership expenses typically consume less than 28 percent of average local wages in the fourth quarter of 2022 include Wayne County (16.9%); Philadelphia County (18.2%); Cuyahoga County (19.7%); Allegheny County, Pennsylvania (20.7%) and St. Louis County (24.1%).
Major takeaway:
The report found that with affordability declining, annual wages of more than $75,000 are needed to pay for major costs on the median-priced home purchased in 291, or 50%, of the 581 markets in the report.
The top 25 highest annual wages required to afford typical homes again are on the east or west coast, led by San Mateo County, California ($367,563); New York County ($364,861); Marin County ($349,140); San Francisco County, California ($327,634) and Santa Clara County, California ($322,775). The lowest annual wages required to afford a median-priced home are in Cambria County, PA ($22,502); Schuylkill County ($22,974); St. Lawrence County($26,714); Macon County, Illinois ($26,788) and Bibb County, Georgia ($27,332).
Among the 581 counties analyzed, ATTOM stated that 99% are less affordable than their historic affordability averages, virtually the same as the 98% last quarter but is up from 68% of last year. Historic indexes worsened in 97% of those counties, helping to drive the nationwide index down to its lowest point since the second quarter of 2007.
Counties with a population of at least 1 million that are less affordable than their historic averages (indexes of less than 100 are considered less affordable) include Collin County (50); Hillsborough County, Florida (55); Wayne County (55); Mecklenburg County, North Carolina (56) and Maricopa County (56). Counties with the worst affordability indexes are Rankin County, Mississippi (44); Clayton County, Georgia (45); Jackson County, Mississippi (48); Benton County, Washington (48) and Newton County, Georgia (49).
“Prospective homebuyers – especially first-time buyers – can’t seem to catch a break,” said Rick Sharga, executive vice president of market intelligence at ATTOM. “For the past two years home prices have appreciated in double digits – 15 to 20 percent a year in some markets. Now that home prices have plateaued and even declined in some markets, buyers are faced with mortgage rates that have doubled, making home purchases even less affordable.”
Sharga added, “There is a scenario where affordability improves as we move through 2023. Wage growth continues to be strong; home prices appear to have stabilized and are even going down slightly; and mortgage rates may have peaked for this cycle, and could go down gradually next year. If those conditions remain in place, the affordability picture is much brighter for a lot of potential buyers.”
For the full report, click here.
