US housing less affordable than any point in over a decade, ATTOM report shows

Housing became less affordable than historical averages in the fourth quarter of 2021 in 77% of U.S. counties, compared to just 39% in the fourth quarter of the year prior, according to new data from ATTOM Data Solutions. 

It's now less affordable than at any point in the past 13 years as home prices continue to rise faster than wages in most of the U.S., ATTOM’s latest Home Affordability Report showed. The report measures affordable housing by calculating the median income needed to meet homeownership expenses like mortgages, property taxes and homeowners insurance on a median-priced home and assumes a 20% down payment. The report also assumes a 28% debt-to-income ratio. 

"House hunters largely unscathed financially by the pandemic have surged into the market amid a combination of mortgage rates hovering around 3% and a desire to trade congested virus-prone areas for the perceived safety of a house and yard, as well as the space for growing work-at-home lifestyles," ATTOM’s report stated. "But they have been chasing a tight supply of homes made tighter by the pandemic. The soaring demand combined with the limited supply have pushed prices ever higher and affordability downward."

If you are considering buying a home but are hesitant due to rising prices, consider taking a cash-out refinance on your mortgage loan and using it for home improvement projects while possibly lowering your monthly mortgage payments due to lower interest rates. Visit Credible to find your personalized rate without affecting your credit score.

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Homeownership is achievable, but less affordable

The percentage of counties where affordability is worse than historical averages hit another peak in Q4 2021, reaching the highest level since the third quarter of 2008. Despite this increase to the median price of homes, though, homeownership is still achievable for the average wage earner. 

"The average wage earner can still afford the typical home across the United States, but the financial comfort zone continues shrinking as home prices keep soaring and mortgage rates tick upward," said ATTOM Chief Product Officer Todd Teta. "Historically low rates and rising wages are still big reasons why workers can meet or come very close to standard lending benchmarks in a majority of counties we analyze. 

"But the portion of wages required for major ownership expenses nationwide is getting closer to levels where banks become less likely to offer home loans," Teta said. "Amid very uncertain times, with the pandemic again threatening the economy, we will keep watching this key measure of housing market stability."

If you are unsure about entering the housing market due to rising costs, consider taking out a mortgage refinance while interest rates are low. Visit Credible to compare multiple mortgage lenders at once and choose the one with the best mortgage rate for you.

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Price gains outpacing wage growth in nearly 80% of U.S.

Median home prices on single-family homes increased by 10% or more in the fourth quarter for 64% of U.S. counties. These gains are quickly outpacing wage growth, and many potential homebuyers don’t have enough income to buy a home as a result. In fact, home price appreciation outpaced weekly wage growth in 78% of U.S. counties in the fourth quarter, according to ATTOM.

Counties in which the smallest portion of wages were needed for housing costs, were located in states such as Illinois, Georgia, Michigan, and Pennsylvania. In half of the U.S., the cost of owning a home still totaled just 28% in the fourth quarter, but about 20% of counties required an annual income of $75,000 or more to purchase a home.

If you are interested in purchasing a home but cost burdens are holding you back, consider taking equity out of your current home, which could be used for home improvement projects and lowering your monthly payment. Contact Credible to speak to a home loan expert and get all of your questions answered.

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