ATTOM, curator of the nation’s premier property database, today released its third-quarter 2021 U.S. Home Affordability Report, showing that median-priced single-family homes are less affordable in the third quarter compared to historical averages in 75 percent of counties across the nation with enough data to analyze. That is up from 56 percent of counties in the third quarter of 2020, to the highest point in 13 years, as home prices have increased faster than wages in much of the country.
The report determined affordability for average wage earners by calculating the amount of income needed to meet monthly homeownership 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 430 of the 572 counties analyzed in the third quarter of 2021 are less affordable than past averages. The latest number is up from 317 of the same group of counties in the third quarter of 2020 – a downturn that developed as the median national home price shot up 18 percent to a record high of $315,500.
While major ownership costs on median-priced homes do remain within the financial means of average workers across the nation in the third quarter of 2021, the percentage of counties where affordability is worse than historical averages has hit its highest 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 24.9 percent of the average national wage of $64,857 in the third quarter of this year. That is up from 24.3 percent in the second quarter of 2021 and 22.3 percent in the third 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.
Those mixed patterns in the third quarter have followed similar trends from earlier in 2021 as the U.S. housing market continues booming despite damage to large segments of the U.S. economy caused by the Coronavirus pandemic that struck in early 2020.
Home prices have continued rising in most of the country for the 10th straight year as a glut of home buyers chase a tight supply of homes for sale made even worse by the pandemic. The surge has come amid historically low home-mortgage rates and a desire of many households, largely unscathed financially by the crisis, to seek the relative safety a house or condominium and space for developing work-at-home lifestyles. Mortgage rates below 3 percent throughout most of the past year have helped offset the impact of rising prices, but not enough to prevent the cost of homeownership from getting closer to the unaffordable benchmark.
“The typical median-priced home around the U.S. remains affordable to workers earning an average wage, despite prices that keep going through the roof. Super-low interests and rising pay continue to be the main reasons why,” said Todd Teta, chief product officer with ATTOM. “But affordability keeps inching in the wrong direction as the housing market boom keeps roaring ahead. That’s pushing average workers closer and closer to the point where lenders might be reluctant to give them a mortgage. With much still uncertain about how the pandemic and many other forces could still affect the economy, affordability remains a crucial measure of market stability that could easily keep going in the same direction or swing back the other way.”
Q3 2021 U.S. Home Affordability Heat Map can be viewed here.
As historic affordability slides this quarter, major home-ownership expenses on typical homes still are affordable to average local wage earners in 303 of the 572 counties in the report (53 percent), based on the 28-percent guideline. The largest counties include Cook County (Chicago), IL; Harris County (Houston), TX; Dallas County, TX; Bexar County (San Antonio), TX, and Wayne County (Detroit), MI.
The most populous of the 269 counties where major expenses on median-priced homes are unaffordable for average local workers in the third quarter of 2021 (47 percent of the counties analyzed) are Los Angeles County, CA; Maricopa County (Phoenix), AZ; San Diego County, CA; Orange County, (outside Los Angeles), CA, and Miami-Dade County, FL.
Home prices up at least 10 percent in almost two-thirds of country
Median single-family home prices in the third quarter of 2021 are up by at least 10 percent from the third quarter of 2020 in 381, or 67 percent, of the 572 counties included in the report. Data was analyzed for counties with a population of at least 100,000 and at least 50 single-family home and condo sales in the third quarter of 2021.
Among the 43 counties with a population of at least 1 million, the biggest year-over-year gains in median prices during the third quarter of 2021 are in Middlesex County (outside Boston), MA (up 32 percent); Maricopa County (Phoenix), AZ (up 24 percent); Travis County (Austin), TX (up 23 percent); Hillsborough County (Tampa), FL (up 22 percent) and Clark County (Las Vegas), NV (up 22 percent).
Counties with a population of at least 1 million that have the smallest year-over-year median-price increases in the third quarter of 2021 are New York County (Manhattan), NY (up less than 1 percent); Fairfax County, VA (outside Washington, DC) (up 5 percent); Santa Clara County (San Jose), CA (up 6 percent); Suffolk County, NY (eastern Long Island) (up 7 percent) and Dallas County, TX (up 7 percent).
Price gains outpace wage growth in three-quarters of markets
Home-price appreciation is greater than weekly wage growth in the third quarter of 2021 in 428 of the 572 counties analyzed in the report (75 percent), with the largest including Los Angeles County, CA; Harris County (Houston), TX; Maricopa County (Phoenix), AZ; Miami-Dade County, FL, and Dallas County, TX.
Average annualized wage growth is outpacing home-price appreciation in the third quarter of 2021 in 144 of the counties in the report (25 percent), including Cook County (Chicago), IL; San Diego County, CA; Orange County, CA (outside Los Angeles); Santa Clara County (San Jose), CA, and Alameda County (Oakland), CA.
Less than 28 percent of average local wages required to buy a home in half the nation
Major ownership costs on median-priced homes in the third quarter of 2021 consume less than 28 percent of average local wages in 303 of the 572 counties analyzed in this report (53 percent).
Counties requiring the smallest portion are Schuylkill County, PA (outside Allentown) (9.5 percent of annualized weekly wages needed to buy a home); Fayette County, PA (outside Pittsburgh) (10.6 percent); Cambria County, PA (outside Pittsburgh) (10.9 percent); Macon County (Decatur), IL, (11.3 percent) and Bibb County (Macon), GA (11.4 percent).
Among the 43 counties in the report with a population of at least 1 million, those where homeownership typically consumes less than 28 percent of average local wages in the third quarter of 2021 include Wayne County (Detroit), MI (12.8 percent); Philadelphia County, PA (15.2 percent); Cuyahoga County (Cleveland), OH (16.4 percent); Harris County (Houston), TX (21.6 percent) and Cook County (Chicago), IL (21.8 percent).
A total of 269 counties in the report (47 percent) require more than 28 percent of annualized local weekly wages to afford a typical home in the third quarter of 2021. Counties that require the greatest percentage of wages are Kings County (Brooklyn), NY (78.7 percent of annualized weekly wages needed to buy a home); Santa Cruz County, CA (77.7 percent); Marin County, CA (outside San Francisco) (75.1 percent); Maui County, HI (66.2 percent) and Monterey County, CA (outside San Francisco) (63.7 percent).
Aside from Kings County, NY, counties with a population of at least 1 million where homeownership consumes the highest percentage of average annualized local wages in the third quarter include Orange County, CA (outside Los Angeles) (57.9 percent); Queens County, NY (56 percent); Nassau County, NY (outside New York City) (55.3 percent) and Alameda County (Oakland), CA (54.3 percent).
More than $75,000 in annual wages needed to afford median-priced home in just one of every five markets
Annual wages of more than $75,000 are needed in the third quarter of 2021 to afford the typical home in just 106, or 19 percent, of the 572 markets in the report.
The top 33 highest annual wages required to afford the typical home are all on the east or west coasts, led by New York County (Manhattan), NY ($247,479); San Mateo County (outside San Francisco), CA ($246,824); San Francisco County, CA ($241,125); Marin County (outside San Francisco), CA ($232,106) and Santa Clara County (San Jose), CA ($223,718).
The lowest annual wages required to afford a median-priced home in the third quarter of 2021 are in Schuylkill County, PA (outside Allentown) ($15,834); Fayette County, PA (outside Pittsburgh) ($16,497); Cambria County, PA (outside Pittsburgh) ($16,895); Robeson County, NC (outside Fayetteville) ($19,358) and Bibb County (Macon), GA ($19,471).
Homeownership less affordable than historic averages in three-quarters of counties
Among the 572 counties analyzed in the report, 430 (75 percent) are less affordable in the third quarter of 2021 than their historic affordability averages, up from 56 percent of the same group of counties that were less affordable historically in the third quarter of 2020.
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 compared to historic averages) include Wayne County (Detroit), MI (index of 71); Tarrant County (Fort Worth), TX (78); Oakland County, MI (outside Detroit) (78); Maricopa County (Phoenix), AZ (79) and Travis County (Austin), TX (79).
Counties with the worst affordability indexes in the third quarter of 2021 include Canyon County, ID (outside Boise) (index of 58); Blount County, TN (outside Knoxville) (64); Ada County (Boise), ID (67); Grayson County, TX (outside Dallas) (67) and Rutherford County (Murfreesboro), TN (68).
Among counties with a population of at least 1 million, those where the affordability indexes worsened most from the third quarter of 2020 to the third quarter of 2021 are Middlesex County, MA (outside Boston) (index down 19 percent); Maricopa County (Phoenix), AZ (down 15 percent); Hillsborough County (Tampa), FL (down 14 percent); Clark County (Las Vegas), NV (down 14 percent) and Pima County (Tucson), AZ (down 13 percent).
Only a quarter of markets are more affordable than historic averages
Among the 572 counties in the report, 142 (25 percent) are more affordable than their historic affordability averages in the third quarter of 2021, down from 44 percent of the same group in the third quarter of last year.
Counties with a population of at least 1 million that are more affordable than their historic averages (indexes of more than 100 are considered more affordable compared to historic averages) include New York County (Manhattan), NY (index of 142); Suffolk County, NY (eastern Long Island) (116); Montgomery County, MD (outside Washington, D.C.) (114); Santa Clara County (San Jose), CA (112) and Fairfax County, VA (outside Washington, D.C.) (109).
Outside of New York County, NY, counties with the best affordability indexes in the third quarter of 2021 include Macon County (Decatur), IL (index of 157); San Francisco County, CA (142); Charleston County, SC (137) and San Mateo County, CA (outside San Francisco) (127).
Counties with a population of least 1 million residents where the affordability index improved most or declined the least from the third quarter of last year to the same period this year are New York County (Manhattan), NY (index up 12 percent); Santa Clara County (San Jose), CA (up 7 percent); Fairfax County, VA (outside Washington, DC) (up 1 percent); Contra Costa County, CA (outside San Francisco) (down less than 1 percent) and Suffolk County, NY (eastern Long Island (down 1 percent).
Report Methodology
The ATTOM U.S. Home Affordability Index analyzes median home prices derived from publicly recorded sales deed data collected by ATTOM and average wage data from the U.S. Bureau of Labor Statistics in 572 U.S. counties with a combined population of 252 million. The affordability index is based on the percentage of average wages needed to pay for major expenses on a median-priced home with a 30-year fixed-rate mortgage and a 20 percent down payment. Those expenses include property taxes, home insurance, mortgage payments, and mortgage insurance. Average 30-year fixed interest rates from the Freddie Mac Primary Mortgage Market Survey were used to calculate the monthly house payments.
The report determined affordability for average wage earners by calculating the amount of income needed for major homeownership expenses on a median-priced home, assuming a loan of 80 percent of the purchase price and a 28 percent maximum “front-end” debt-to-income ratio. For example, the nationwide median home price of $315,500 in the third quarter of 2021 required an annual wage of $57,727, based on a $63,100 down payment, a $252,400 loan, and monthly expenses not exceeding the 28 percent barrier — meaning households would not be spending more than 28 percent of their income on mortgage payments, property taxes, and insurance. That required income was less than the $64,857 average wage nationwide based on the most recent average weekly wage data available from the Bureau of Labor Statistics, making a median-priced home nationwide affordable for average workers.
