IRVINE, Calif.– Home affordability hit an eight-year low during the first quarter of 2017, according to a new analysis.
Average wage earners would need to spend more than 43% of their income — the maximum debt-to-income ratio allowed for a "qualified mortgage" under guidelines from the Consumer Financial Protection Bureau — to buy a median-priced home in 97 of the 379 counties (26%) analyzed for the report published by ATTOM Data Solutions.
"Home affordability continued to worsen in the first quarter, not surprising given the continued strong growth in home prices combined with the recent rise in mortgage rates," said Daren Blomquist, senior vice president at ATTOM Data Solutions. "Stronger wage growth is the silver lining in this report, outpacing home price growth in more than half of the markets for the first time since Q1 2012, when median home prices were still falling nationwide."
"Many homebuyers have been priced out of the Seattle housing market, forcing them to buy in other counties and commute," added Matthew Gardner, chief economist at Windermere Real Estate, covering the Seattle housing market, where all three counties in the metro area posted worsening affordability compared to a year ago. "The data also shows that the affordability level in King County has eroded to levels we haven't seen since 2010. Moreover, I believe that it will get worse before it gets better thanks to our growing population, inadequate infrastructure, and land constraints."
Average wage earners would need to spend more than 100% of their income to buy a median-priced home in five of the 379 counties analyzed.