Homeownership remains affordable for average workers across majority of U.S.

IRVINE, California — ATTOM Data Solutions, curator of the nation’s premier property database, recently released its first-quarter 2021 U.S. Home Affordability Report, showing that median home prices of single-family homes and condos in the first quarter of this year were more affordable than historical averages in 52 percent of counties with enough data to analyze. That was down from 63 percent of counties in the first quarter of 2020 and 95 percent during the same period five years ago. But rising wages and falling mortgage rates still compensated for near-20 percent spikes in home prices over the past year, helping to keep median home prices affordable for average wage earners around 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 home, assuming an 80 percent down payment and a 28 percent maximum “front-end” debt-toincome ratio. That required income was then compared to annualized average weekly wage data from the Bureau of Labor Statistics. The 80-percent down-payment criterion marks an update to ATTOM’s affordability analysis, which now shows smaller portions of income needed to afford homeownership than recent reports.

Compared to historical levels, median home prices in 287 of the 552 counties analyzed in the first quarter of 2021 were more affordable than past averages. That was down from 349 of the same group of counties in the first quarter of 2020, a trend that came during a 12-month period when the national median home price shot up 18 percent, to $278,000, in the first quarter of 2021.

Yet, with workplace pay rising and home mortgage rates continuing to hit historic lows, major expenses on a median-priced home nationwide still consumed just 23.7 percent of the average wage across the country in the first quarter of 2021. That figure was up from 22 percent in the first quarter of 2020 and from 19.7 percent five years ago. But it remained well within the 28 percent standard that lenders prefer for how much homeowners should spend on those major expenses.

Those mixed trends — homes remaining affordable but not quite as much as they have historically — happened amid a surge over the past year of homebuyers who largely escaped the economic damage caused by the recent coronavirus pandemic. As those home seekers pursued a dwindling supply of homes for sale, prices shot up — just not enough to significantly outweigh the benefits of increased wages and average mortgage rates that sat below 3 percent.

“The past year certainly has been an odd one for the U.S. housing market. Home prices surged at a remarkable pace, even as the virus pandemic damaged the U.S. economy, which dropped historical affordability levels. But average workers untarnished by the pandemic were still able to afford the typical home because wages and rock-bottom interest rates worked to their favor in a big way,” said Todd Teta, chief product officer with ATTOM Data Solutions. “Much remains uncertain about the housing market in 2021. A lot will depend on how well the broader U.S. economy recovers from the pandemic and whether there are still many more buyers looking to escape congested neighborhoods most prone to the virus, pushing prices even higher. But for now, our data shows that average workers are able to manage the costs associated with rising values.”

Among the 552 counties in the report, 327 (59 percent) had major homeownership expenses on typical homes in the first quarter of 2021 that were affordable for average local wage earners, based on the 28 percent guideline. The largest of those counties were Cook County (Chicago), Illinois; Harris County (Houston), Texas; Dallas County, Texas; Bexar County (San Antonio), Texas; and Wayne County (Detroit), Michigan.

The most populous of the 225 counties where major expenses on median-priced homes were unaffordable for average local earners in the first quarter of 2021 (41 percent of the counties analyzed) were Los Angeles County, California; Maricopa County (Phoenix), Arizona; San Diego County, California; Orange County, (outside Los Angeles), California; and Miami-Dade County, Florida.

Home prices up at least 10 percent in two-thirds of country

Median home prices in the first quarter of 2021 were up by at least 10 percent from the first quarter of 2020 in 360, or 65 percent, of the 552 counties included in the report. Counties were included if they had a population of at least 100,000 and at least 50 single-family home and condo sales in the first quarter of 2021.

Among the 42 counties with a population of at least 1 million, the biggest yearover-year gains in median prices during the first quarter of 2021 were in Wayne County (Detroit), Michigan (up 24 percent); Suffolk County, New York (outside New York City) (up 20 percent); Bronx County, New York (up 19 percent); Maricopa County (Phoenix), Arizona (up 19 percent); and Harris County (Houston), Texas (up 18 percent).

Counties with a population of at least 1 million that had the smallest year-over-year increases (or price declines) in the first quarter of 2021 were New York County (Manhattan), New York (down 2 percent); Santa Clara County (San Jose), California (up 7 percent); Hennepin County (Minneapolis), Minnesota (up 7 percent); Kings County (Brooklyn), New York (up 8 percent); and Orange County, California (outside Los Angeles) (up 8 percent).

Price appreciation up more than wage growth in almost 90 percent of markets

Home price appreciation outpaced average weekly wage growth in the first quarter of 2021 in 474 of the 552 counties analyzed in the report (86 percent), with the largest counties including Los Angeles County, California; Cook County (Chicago), Illinois; Harris County (Houston), Texas; Maricopa County (Phoenix), Arizona; and San Diego County, California.

Average annualized wage growth outpaced homeprice appreciation in the first quarter of 2021 in only 78 of the 552 counties in the report (14 percent), including Santa Clara County (San Jose), California; New York County (Manhattan), New York; Honolulu County, Hawaii; San Francisco County, California; and Suffolk County (Boston), Massachusetts.

Less than 28 percent of wages needed to buy a home in six of every 10 markets

Major ownership costs on median-priced homes in the first quarter of 2021 consumed less than 28 percent of average local wages in 327 of the 552 counties analyzed in this report (59 percent).

Counties with the smallest percent were Schuylkill County, Pennsylvania (outside Allentown) (6.3 percent of annualized weekly wages needed to buy a home);

Bibb County (Macon), Georgia (8.3 percent); Fayette County, Pennsylvania (outside Pittsburgh) (8.4 percent); Macon County (Decatur), Illinois (9.9 percent); and Robeson County, North Carolina (outside Fayetteville) (10.6 percent).

Among the 42 counties in the report with a population of at least 1 million, those where homeownership typically consumed less than 28 percent of average local wages in the first quarter of 2021 included Wayne County (Detroit), Michigan (12.2 percent); Philadelphia County, Pennsylvania (14.1 percent); Cuyahoga County (Cleveland), Ohio (14.4 percent); Fulton County (Atlanta), Georgia (19.4 percent); and Franklin County (Columbus), Ohio (19.5 percent).

A total of 225 counties in the report (41 percent) required more than 28 percent of annualized local weekly wages to afford a typical home in the first quarter of 2021. Those counties that required the greatest percentage of wages were Kings County (Brooklyn), New York (75.7 percent of annualized weekly wages needed to buy a home); Marin County, California (outside San Francisco) (75.5 percent); Santa Cruz County, California (69.9 percent); Monterey County, California, (outside San Francisco) (68.1 percent); and Maui County, Hawaii (65.9 percent).

Aside from Kings County, New York, counties with a population of at least 1 million where homeownership consumed more than 28 percent of average annualized local wages in the first quarter included Orange County, California (outside Los Angeles) (57.7 percent); Queens County, New York (56.3 percent); Nassau County, New York (outside New York City) (53.5 percent); and Alameda County (Oakland), California (51.6 percent).