Home Prices Are Rising Faster Than Wages
-
Loading... - Jackson Campbell
- 11 Apr 2022
- 327 Views
- 0 Like
- 0 Comment
Home prices continue to rise faster than wages in most of the country. Researchers determined affordability for average wage earners by calculating the amount of income needed to meet major monthly homeownership expenses, including the mortgage, property taxes, and insurance, on a median-priced single-family home.
“It’s certainly no surprise that affordability is more challenging today for prospective home buyers than it was a year ago,” says Rick Sharga, executive vice president of market intelligence for ATTOM. “Historically low mortgage rates and higher wages helped offset rising home prices over the past few years, but as home prices continue to soar and interest rates approach 5% on a 30-year fixed-rate loan, more consumers are going to struggle to find a property they can comfortably afford.”
Still, major ownership costs on median-priced homes did remain within the financial means of average U.S. workers in the first quarter, according to the report. Ownership costs made up 26.3% of the $66,560 average national wage. That is within the 28% benchmark that most financial experts use to compare housing affordability with wages.
That said, 26.3% of average wages needed to buy a median-priced home is the highest percentage since the third quarter of 2008. Also, it is up from 24.9% compared to the fourth quarter of 2021.
Even with increases in home prices, homes were still affordable to average local wage earners during the first quarter in about half of the 586 counties tracked in the report.
“The good news is that in almost half the counties we reviewed, home ownership costs remained below 28% for households with average income,” Sharga says. “But the ‘x-factor’ is what impact 8% inflation rates will have on these households, and their ability to meet their financial obligations. Rising food and energy prices could be a hidden factor that makes affordability even more of a challenge for home buyers and makes it more difficult to make ends meet for current homeowners.” Read More…
