#United States #Irvine #Housing Market #ATTOM #Home Affordability

U.S. Home Affordability Declines in Fourth Quarter 2024

A recent report from ATTOM, a prominent data provider in real estate analytics, reveals an alarming trend regarding home affordability across the United States. With home prices soaring, particularly in the fourth quarter of 2024, potential homebuyers are facing significant challenges in securing affordable housing. The report indicates that in a staggering 98% of the counties examined, median home prices for single-family homes and condominiums are less affordable compared to historical standards. This worsening situation marks a continuation of a concerning three-year trend where substantial portions of income are dedicated to homeownership costs.

As it stands, major home expenses account for approximately 34% of the average national wage, reflecting an increase of over one percentage point from both the previous quarter and year. This figure significantly surpasses the generally accepted guideline of 28% for lenders, making it increasingly difficult for average workers to own homes without financial strain.

The report highlights that the national median home price has surged to $364,750 during this quarter, with mortgage rates hovering above 6%. Although mortgage rates have shown slight declines recently, they have not been enough to alleviate the financial burdens faced by prospective buyers. Furthermore, the amount of income required to manage these costs exceeds what average wage earners can afford, indicating a growing disconnect between wages and home expenses.

One notable observation from the report is a reversal of a temporary improvement in home affordability that was noted in the third quarter of this year. The current data reveals that the share of wages allocated to mortgage payments, property taxes, and insurance has skyrocketed, echoing conditions seen before the housing market crash in the late 2000s. Rob Barber, CEO of ATTOM, expressed concern about the ongoing situation, stressing that average workers now allocate a larger share of their wages towards home expenses than at any previous time in recent history.

Additionally, this affordability crisis is underscored by year-over-year changes in housing expenses that consistently outpace wage increases. Of the counties analyzed, 556 out of 566 reported that homeownership costs have worsened relative to historical levels. In light of these factors, many potential homebuyers are now reconsidering their options, with many feeling compelled to wait for more favorable conditions before pursuing homeownership.

County-Level Analysis

Delving deeper into the data, the report reveals that counties with significant populations are feeling the impact of rising costs most acutely. Regions like Los Angeles County, CA; Maricopa County, AZ; and Miami-Dade County, FL are among those categorized as unaffordable, further exacerbating the struggles of would-be homeowners. In contrast, some areas, such as Cook County, IL and Harris County, TX, are still managing to offer relatively affordable housing options.

Overall, the report paints a sobering picture of a national housing market that profits sellers while pushing buyers into increasingly untenable financial situations. As home prices continue to rise, the worries of millions of potential homeowners deepen. To summarize, homeowners are facing unprecedented financial stress, and the path to homeownership is growing increasingly elusive for average workers across the country. The necessity for substantial changes in the market to address these affordability issues has never been clearer, as time may be running out for many individuals hoping for a slice of the American Dream.

In conclusion, ATTOM's findings underscore an urgent need for policy changes and solutions aimed at ensuring that homeownership becomes attainable for average American workers once again.