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Forget affordability—the American dream is now a fairy tale for many would-be home buyers.
A median-priced home was out of reach for Americans in 84% of counties in the third quarter of the year, according to ATTOM Data Solutions’ third-quarter Home Affordability Report. To come up with its figures, the real estate information company looked at U.S. Bureau of Labor Statistics wage data in each of the 440 counties it analyzed as well as sales deed data.
The report also found 30% of folks lived in places where they needed a household income of at least $100,000—if not more—to buy a median-priced home. Ouch.
(ATTOM assumed that buyers had at least a 3% down payment and were taking out a 30-year fixed-rate mortgage. Property taxes and home and mortgage insurance payments were also factored in.)
“We’ve reached a tipping point for affordability,” says Daren Blomquist, senior vice president of ATTOM. While prices aren’t coming down, he’s starting to see the rate of increases slow just a bit.
“Something has to give,” he says. “Prices cannot climb as quickly as they have been over the last few years.”
Nationally, home affordability fell to its lowest level in the past decade. That’s bad news for bargain hunters, as home prices rose at a faster rate than wages in about 86% of the counties in the report.
Denver and its surrounding counties were named the most unaffordable in the country, thanks to the discrepancies between home prices and household incomes. Largely because of its status as a growing tech (and craft beer) hub, as well as the legalization of marijuana, the Mile High City has seen real estate prices go on a tear over the past few years as more folks are moving in.
“People have moved from more expensive coastal markets to Denver … [and] they’re able and willing to pay more,” says Blomquist. “That’s accelerated prices in the Denver market. It’s bad news for people who live there and are making the average wages, because those folks are getting locked out of homeownership.”
Denver County was followed by Arapahoe County, in the Denver metro area; Tarrant County, TX, in the Dallas metro area; Kent County, MI, which encompasses Grand Rapids; and Jefferson County, CO, which is also part of the Denver metro area. (ATTOM looked only at counties with at least 500,000 residents.)
Meanwhile, Brooklynites need to fork over the highest percentage of their incomes, 37%, to become homeowners. So while wages were high enough relative to their incomes, they were paying the highest share of their earnings on homes.
Kings County, NY, the official name of Brooklyn, was followed by Marin County, CA, in the San Francisco metro area; Santa Cruz County, CA; San Luis Obispo County, CA; and Maui County, HI.
“Those are country club housing markets where there’s a limited few who can afford to buy there,” says Blomquist. “And the average Joe cannot and is not buying homes.”
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