Homeownership is unaffordable for the average wage earner in three quarters of counties surveyed across the U.S.
That’s according to a second-quarter report from Attom Data Solutions, which studied more than 400 counties covering about 200 million people.
The most cost-burdened areas were on the coasts, including the top five. Eighteen of the top 25 priciest markets were in New York or California.
To be able to afford a median-priced home in New York County (Manhattan) a person had to earn $341,401 a year, according to the report. That made it the costliest county in the nation. It was followed by four California counties: San Francisco County, where a person had to earn $332,317; San Mateo County ($326,709); Marin County ($289,269); and Santa Clara County ($282,021).
The five counties with the lowest annual wages needed to afford a median-priced home were Macon County, Illinois, ($19,572); Montgomery County, Alabama ($25,726); Trumbull County, Ohio, ($26,444); Rock Island County, Illinois ($27,856); and Sumter County, South Carolina ($28,864).
A big driver of housing unaffordability is wage growth lagging behind home price appreciation. Attom found that home price appreciation outpaced average weekly wage growth in the second quarter in two-thirds of the counties.
Home sales are forecast to plummet over the next year as the U.S. economy recovers from coronavirus-related market shocks. But home prices are still rising, and are projected to continue to grow due to pent-up demand. Attom determines home affordability by calculating the percentage of average wages needed to make monthly house payments on a median-priced home, with a 30-year fixed-rate mortgage and a 3 percent down payment.
Several pricey counties were slightly more affordable in the second quarter. Manhattan, Brooklyn and Montgomery County, Maryland, all were more affordable than at the same time last year.
“Virus pandemic concerns are still quite valid and may show up in the coming months, which could hurt prices as well as affordability,” said Todd Teta of Attom. “That remains a significant potential cloud hanging over the market. But as of now, things are looking up for people on both sides of the buying equation.”