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.
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.