IRVINE, Calif., Dec. 30, 2021 /PRNewswire/ — ATTOM, curator of the nation’s premier property database, today released its fourth-quarter 2021 U.S. Home Affordability Report, showing that median-priced single-family homes are less affordable in the fourth quarter compared to historical averages in 77 percent of counties across the nation with enough data to analyze. That’s up from just 39 percent of counties that were historically less affordable in the fourth quarter of 2020, to the highest point in 13 years, as home prices continue rising faster than wages throughout much of the country.
The report determined affordability for average wage earners by calculating the amount of income needed to meet major monthly home ownership expenses — including mortgage, property taxes and insurance — on a median-priced single-family home, assuming a 20 percent down payment and a 28 percent maximum “front-end” debt-to-income ratio. That required income was then compared to annualized average weekly wage data from the Bureau of Labor Statistics (see full methodology below).
Compared to historical levels, median home prices in 440 of the 575 counties analyzed in the fourth quarter of 2021 are less affordable than past averages. The latest number is up from 428 of the same group of counties in the third quarter of 2021 and 224 in the fourth quarter of 2020 – an increase that has continued as the median national home price has shot up 17 percent over the past year to a record high of $317,500.
While major ownership costs on median-priced homes do remain within the financial means of average workers across the nation in the fourth quarter of 2021, the percentage of counties where affordability is worse than historical averages has hit another high point since the third quarter of 2008.
The latest pattern – home prices still manageable but getting less affordable – has resulted in major ownership costs on the typical home consuming 25.2 percent of the average national wage of $65,546 in the fourth quarter of this year. That is up from 24.4 percent in the third quarter of 2021 and 21.5 percent in the fourth quarter of last year. Still, the latest level is within the 28 percent standard lenders prefer for how much homeowners should spend on mortgage payments, home insurance and property taxes.
The mixed fourth-quarter patterns follow similar trends over the past year as the U.S. housing market continues booming for the 10th straight year both because of an in spite of the Coronavirus pandemic that hit in early 2020 and damaged major sectors of the U.S. economy.
House hunters largely unscathed financially by the pandemic have surged into the market amid a combination of mortgage rates hovering around 3 percent and a desire to trade congested virus-prone areas for the perceived safety of a house and yard, as well as the space for growing work-at-home lifestyles. But they have been chasing a tight supply of homes made tighter by the pandemic. The soaring demand combined with the limited supply have …….