Wages Now Struggle to Keep Up with Home Prices

2 minutes read

The latest US Home Affordability Index datafor the second quarter of the year reveals an unsettling fact about homeownership in the country: it’s getting more expensive to own a home since the crisis hit in 2008.

In a recent report provided by California-based housing data and analytics company ATTOM Data Solutions, the average price of a home in the US is now at $253,000, deemed least affordable since the third quarter of 2008, and a nine-year low in affordability.

CRUNCHING THE DATA

In the second quarter of the year, the data reached an index of 100, lowest since Q3, 2008 when the index dipped to 86. Of the 464 counties surveyed, 210 showed to be less affordable than their affordability norms ever recorded. This is also a new high since the fourth quarter of 2009. The new home sales price increased by 7.7 percent, year-over-year, the longest leap since the fourth quarter of 2014.

Yet, despite this race to the top, wage increase struggled to keep up, even recording a negative compared to last year. In fact, the most current data has been the biggest plunge since the fourth quarter of 2011.

Get today’s rates.

WHAT IS DRIVING THIS INCREASE IN HOME PRICES?

The continued sluggishness in housing construction and the competition on the available supply remain the main driving forces that are keeping the prices up. This increase, coupled with the unfortunate pace of wage increase, along with rising interest rates, all in all convolute to sabotage affordability for many potential homebuyers.

OTHER REPORT HIGHLIGHTS:

  • Within the Seattle market, the increase in home prices severely outpaced the increase of wages in all three area counties.
  • Three out of five counties with the lowest affordability index are in Denver.
  • Purchasing a home requires 31.8 percent of the average wage nationwide .
  • In 31 percent of the markets surveyed, 43 percent of the average wages are needed to buy a home; while
  • In 22 percent of the markets, 25 percent of the wage averages is required to acquire/purchase a home.
Facebook Twitter LinkedIn Telegram Whatsapp Pocket

Related Posts:

The USDA loan allows buyers in rural areas with low to moderate income to buy a home with no money down. While it sounds great, you can’t just go out and buy any home. The USDA wants lenders to make sure the home is safe, sound, and sanitary. At a minimum, the...
There is no formula for directly measuring property value. Various factors are at play and more often than not, they are at a continuous state of fluctuation. One necessary distinction that has to be made, however, is the difference between what you call home ...
Have you ever thought of refinancing your home equity loan? It’s not a common practice, but it can definitely have some benefits. Because your home equity loan might change over time, you may want to reevaluate your situation to see if you should consider refi...
VA loans can be used to buy a manufactured home, but you may have to shop around for a willing lender. The VA has their own rules and guidelines, which include the ability to buy a manufactured home, but it’s up to the VA lender if they are comfortable with th...
Refinances, particularly cash-out refinances, picked up during the first quarter of 2017 per Freddie Mac’sHousing Outlook in May. This resilience in refi activity, combined with declining mortgage rates and rising home prices, made Freddie to revise its projec...
Building your own home from the ground up is exciting. You get to choose many aspects of the home right from the start that you otherwise could not do with an existing home. Remember, however, it is still a home purchase and possibly one of the largest investm...