America's Home Affordability Issues Worsen in Mid 2024

America's Home Affordability Issues Worsen in Mid 2024

Residential News » Irvine Edition | By Michael Gerrity | July 9, 2024 9:10 AM ET

According to ATTOM's newly released second-quarter 2024 U.S. Home Affordability Report, the median-priced single-family homes and condos remained less affordable compared to historical averages in 99 percent of counties. This trend, which began in early 2022, shows that home ownership now demands historically large portions of wages nationwide due to high residential mortgage rates and elevated home prices.

"The latest affordability data presents a clear challenge for home buyers. While home prices are increasing and mortgage rates remain relatively high, these factors are making homes less affordable," said Rob Barber, CEO for ATTOM. "It's common for these trends to intensify during the Spring buying season when buyer demand increases. However, the trends this year are particularly challenging for house hunters, more so than at any point since the housing market boom began in 2012."

Key Report Findings

  • Major expenses on median-priced homes consumed 35.1 percent of the average national wage in Q2 2024, the highest since 2007 and above the 28 percent lending guideline.
  • Median home ownership costs in 582 of the 589 counties analyzed were less affordable than in the past, up from 579 in Q1 2024 and 577 in Q2 2023.
  • The national median home price reached a new high of $360,000, driven by a 7.3 percent quarterly and 4.7 percent annual increase, while mortgage rates remained around 7 percent.
  • The portion of average wages required for mortgage payments, property taxes, and insurance rose about three percentage points from both Q1 2024 and Q2 2023.
  • Home ownership expenses increased by about 10 percent in Q2 2024 after a slight decline in the prior two quarters.

Affordability Analysis

  • Affordability was calculated by comparing the income needed to cover major home ownership expenses (assuming a 20 percent down payment and a 28 percent debt-to-income ratio) to average weekly wage data from the U.S. Bureau of Labor Statistics.
  • Median prices rose in 514 (87.3 percent) of the 589 counties from Q1 to Q2 2024, and annually in 441 (74.9 percent) of those markets.

County-Level Insights

  • Among the 47 counties with populations of at least 1 million, the largest year-over-year increases in median prices were in Orange County, CA (16.2 percent), Alameda County, CA (12 percent), King County, WA (11.3 percent), Santa Clara County, CA (9.8 percent), and Nassau County, NY (8.9 percent).
  • Counties with significant annual price decreases included Honolulu County, HI (3.8 percent), Tarrant County, TX (1.5 percent), Oakland County, MI (1.4 percent), Hennepin County, MN (1.1 percent), and Fulton County, GA (1 percent).

Affordability Challenges

  • Major home ownership expenses were unaffordable in about 80 percent of the 589 counties analyzed, based on the 28 percent guideline.
  • The portion of average local wages required for major home ownership expenses rose in 547 (92.9 percent) of the counties from Q1 to Q2 2024, and in 92.4 percent of those markets year-over-year.
  • Typical costs for mortgage payments, insurance, and property taxes hit a new high, consuming 35.1 percent of the average annual national wage, far above the recent low of 21.3 percent in Q1 2021.

Regional Trends

  • The worst affordability declines generally affected upscale markets in the West and Northeast, with Q2 median prices of at least $450,000.
  • The most challenging affordability conditions were in counties such as Santa Cruz County, CA (113.8 percent of annual wages needed), Kings County, NY (111.8 percent), Marin County, CA (109.2 percent), Maui County, HI (105.9 percent), and Orange County, CA (103.4 percent).
  • Conversely, the most affordable markets included Cambria County, PA (12 percent of annual wages needed), Macon County, IL (13.3 percent), Peoria County, IL (14.6 percent), Schuylkill County, PA (14.6 percent), and Mercer County, PA (15.2 percent).

Income Requirements

  • Major home ownership expenses on typical homes sold in Q2 2024 required an annual income of $90,598, which is 25.2 percent more than the average national wage of $72,358.
  • Annual wages of over $75,000 were needed in 343 (58.2 percent) of the 589 markets analyzed, posing significant affordability challenges.

Historical Context

  • Among the 589 counties analyzed, 582 (98.8 percent) were less affordable than their historical averages, a slight increase from the previous quarters and a significant jump from early 2021.
  • Counties with significant affordability declines included Orange County, CA, Alameda County, CA, Broward County, FL, King County, WA, and Nassau County, NY.
  • Only seven counties (1.2 percent) were more affordable than their historical averages, including Macon County, IL, San Francisco County, CA, Ontario County, NY, Mercer County, PA, and New York County, NY.

U.S. Home Affordability Chart (2024).jpg

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