Home ownership is now unaffordable in 80% of US counties
A recent report from ATTOM reveals that homeownership expenses have become increasingly unaffordable in a staggering 79% of US counties. This financial strain comes as home prices and mortgage rates continue their upward climb, leaving a significant dent in the average American wage earner's pocket.
The study highlights a concerning trend of eroding affordability in the US housing market, with the recent surge in mortgage rates and housing prices making homeownership costs unmanageable in nearly eight out of ten US counties.
The financial burden of homeownership now consumes a substantial portion of Americans' earnings, reaching a concerning milestone not seen since 2007. On average, homeowners are now allocating a staggering 35% of their wages to cover the various costs associated with owning a home.
Rob Barber, CEO of ATTOM, underscores the challenges facing ordinary Americans in the housing market. He notes that the dynamics at play seem to be consistently working against the interests of everyday citizens, potentially reaching a point where they could significantly impact housing prices. However, he acknowledges that the market continues to surge, with the slowdown seen in the previous year appearing more like a temporary pause.
Barber points out that with the fundamental cost of homeownership devouring over a third of the average income, there's a growing risk of pricing out potential homebuyers. This could ultimately lead to a reduction in demand, potentially alleviating the upward pressure on housing prices. The true impact of these trends will become clearer as the 2023 peak buying season comes to a close.
The increasing unaffordability arises as wages struggle to keep pace with the rapid increases in mortgage rates and home prices. In the third quarter, 30-year fixed mortgage rates exceeded 7%, while the median price for single-family homes and condos soared to a record high of $351,250.
To achieve homeownership for a property purchased in the third quarter, it's now necessary for an annual wage of over $75,000 in 57% of US counties, painting a challenging picture for prospective homebuyers across the nation.