Lately, headlines have been blaring that the housing market is softening. Price acceleration is slowing, more properties are going up for sale, and fewer buyers are duking it out. But that doesn’t mean buyers on a tight budget are finding much relief.
Home affordability reached its lowest level in a decade in the final quarter of the year, according to a recent report from ATTOM Data Solutions. That was the worst it’s been since the third quarter of 2008, when the housing bubble was busy imploding.
The real estate information company calculated home affordability in 469 counties by looking at the percentage of income needed to purchase a median-priced home. ATTOM also factored in historic price averages to come up with its findings.
“Home affordability is getting worse nationwide,” says Daren Blomquist, senior vice president at ATTOM. But buyers shouldn’t lose hope. “We’re going to hit an affordability tipping point in 2019, where it becomes more affordable to buy. Buyers will have more inventory to choose from and they will be running against fewer multiple-offer situations.”
Where is home affordability getting worse?
The prospect of purchasing a home grew ever more difficult in the fourth quarter in 42% of the counties in the report, compared with the third quarter of the year.
They included Los Angeles County, CA; Maricopa County, AZ, home to Phoenix; Riverside County, CA; San Bernardino County, CA; and Clark County, NV, home to Las Vegas.
“The coastal California markets are still highly unaffordable … because there is still a limited supply of homes and a lot of demand,” Blomquist says. So they’re less likely to be affected by a broader housing slowdown. “Those types of markets are going to operate a little bit outside of reality.”
Where is home affordability getting better?
It may be getting ever harder to come up with the cash to become a homeowner in much of the country, but there are pockets where—gasp—it’s getting a little easier.
These markets included Cook County, IL, home to Chicago; Harris County, TX, home to Houston; San Diego County, CA; pricey Orange County, CA, southeast of Los Angeles; and Miami-Dade County, FL.
“The rate of home price appreciation is slowing down in these markets. It’s slowed down enough where it’s actually on par with wage growth,” says Blomquist. “It means for buyers there’s hope to get into homeownership.”
In addition, wages were rising faster than home prices in 22% of housing markets.
They included San Diego County; Kings County, aka Brooklyn, NY; King County, WA, home to Seattle; Silicon Valley’s Santa Clara County, CA, home to San Jose; and New York County, aka Manhattan, NY.
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