About 94% of median-priced single-family homes and condos are less affordable in Q1 2023 compared to historical averages, down from 99% in Q4 2022 but still far above the 62% counties in Q1 2022, according to a new report from ATTOM.
ATTOM’s Q1 2023 Home Affordability Report found that median home prices in 537 of the 572 counties analyzed were less affordable than in the past, down from 565 in Q4 2022 but still well above the 356 in Q1 2022.
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, Texas (65); Tarrant County, Texas (66); Hillsborough County, Florida (67); Mecklenburg County, North Carolina (69) and Dallas County, Texas (69). Counties with the worst affordability indexes are Jackson County, Mississippi (48); Clayton County, Georgia (53); Benton County, Washington (58); Paulding County, Georgia (58) and St. Lucie County, Florida (59).
Meanwhile, among counties with a population of at least 1 million, those where the affordability indexes have improved most are Wayne County, Michigan (+21%); Alameda County, California (+16%); Contra Costa County, California (+14%); Philadelphia County, Pennsylvania (+14%) and Cuyahoga County, Ohio (+13%).
Key highlights:
- Nationwide, the median single-family home, and condo value of $320,000 is virtually the same as the typical $318,000 price in Q4 022 and is up just 1.3% from $316,000 in Q1 2022. At the local level, median home prices remain up from Q1 2022 in 371, or 65%, of those counties.
- Among the 46 counties in the report with a population of at least 1 million, the biggest YoY gains in median sale prices are in St. Louis County, Missouri (+38%); Palm Beach County, FL (+11%); Collin County, TX (+10%); Franklin County, Ohio (+7%) and Miami-Dade County, Florida (+6%).
- Counties with a population of at least 1 million where median prices have dropped the most YoY are Alameda County, California (-16%); Santa Clara County, California (-12%); Contra Costa County, California (-12%); Philadelphia County, Pennsylvania (-11%) and King County, Washington (-8%).
- Weekly annualized wage appreciation has outpaced annual home-price changes in 433 of the 572 counties analyzed in the report (76%). The current group where wage gains are outpacing price changes include Los Angeles County, California; Cook County, Illinois; Harris County, Texas; Maricopa County, Arizona, and San Diego County, California.
- Year-over-year price gains have surpassed average annualized wage growth in just 139 of the 572 counties analyzed (24%). The latest group where prices are going up faster than wages include Kings County, New York; Franklin County, Ohio; Collin County, Texas; St. Louis County, Missouri, and Westchester County, New York.
- The portion of average local wages consumed by major expenses on median-priced, single-family homes and condos has decreased from Q4 2022 in 97% of the 572 counties analyzed. The typical $1,758 cost of mortgage payments, homeowner insurance, mortgage insurance and property taxes nationwide now requires 29.9% of the average annual $70,460 wage. That is down from 31.2% last quarter–the highest level in 15 years–although still up from 24.9% a year ago.
- Counties with the largest quarterly decrease in the portion of average local wages needed for major ownership expenses are Marin County, CA (from 102% to 87.8%); Washington County, Utah (from 73.5% to 62.6%); Santa Cruz County, California (from 110.9% to 100.8%); Nevada County, California (from 71.5% to 61.7%) and Alameda County, California (from 71.4% to 61.8%).
- Major home-ownership expenses on typical homes are considered unaffordable to average local wage earners in 373 of the 572 counties in the report. Counties with the largest populations that are unaffordable in the first quarter are Los Angeles County, California; Maricopa County, Arizona; San Diego County, California; Orange County, California, and Kings County, New York.
Major takeaway:
Despite improving affordability, annual wages of more than $75,000 still are needed to pay for major costs on the median-priced home purchased in 285 (50%) of the 572 markets in the report.
The top 25 highest annual wages required to afford typical homes again are on the east or west coasts, led by New York County, New York ($393,132); San Mateo County, California ($354,814); Marin County, California ($328,712); San Francisco County, California ($321,805) and Santa Clara County, California ($316,948). The lowest annual wages required to afford a median-priced home are in Schuylkill County, Pennsylvania ($21,880); St. Lawrence County, New York ($25,924); Macon County, Illinois ($26,677); Fayette County, Pennsylvania ($27,631) and Bibb County, Georgia ($28,574).
“The soaring housing market has finally come back down in much of the U.S., at least for now, while worker pay is growing. That’s produced some benefits for home seekers in the form of slightly better affordability, especially as lending rates have flattened out,” said Rob Barber, chief executive office for ATTOM. “Things certainly haven’t swung way back into friendly territory. Price drops and wage gains haven’t yet translated into equal improvements in affordability. And the trend could go back the other way if interest rates go up again, as expected. But the scenario is becoming more favorable for buyers.”
“The affordability gains we are seeing so far this year, small as they are, could start to lure buyers back into the markets where they were once put off by soaring prices,” Barber said. “That would help all segments of the market, especially high-end areas that suffered some of the larger price declines since the market started to stall last year.”
For the full report, with additional, more in-depth data, click here.
