More US housing markets were less affordable in first quarter of 2016

More US housing markets were less affordable in first quarter of 2016 More housing markets in the United States were less affordable than their historically normal levels in the first quarter of 2016 than a year ago, new research shows.

Some 9% of county real estate market were less affordable compared with 2% a year ago, according to the analysis of median home prices from publicly recorded sales deed data collected by RealtyTrac and average wage data from the US Bureau of Labour Statistics.

The affordability index was based on the percentage of average wages needed to make monthly house payments on a median priced home with a 30 year fixed rate and a 3% down payment, including property taxes and insurance

Out of the 456 counties analysed in the report, some 43 had an affordability index below 100 in the first quarter of 2016, meaning buying a home was less affordable than the historically normal level for that county going back to the first quarter of 2005. That was up from 10 counties in the first quarter of 2015.

At the peak of the housing bubble in the second quarter of 2006 some 454 of the 456 counties analysed, more than 99%, were less affordable than their historic norms. In the first quarter of 2012, when median home prices bottomed out nationally, only two counties out of the 456 analysed, less than 0.5%, exceeded their historically normal affordability levels.

‘While the vast majority of housing markets are still affordable by their own historic standards, home prices are floating out of reach for average wage earners in a growing number of U.S. housing markets,’ said Daren Blomquist, senior vice president at RealtyTrac.
 
‘The recent drop in interest rates has helped to soften the blow of high flying price appreciation in some markets, but the affordability equation could change quickly if interest rates trend higher and home prices continue to rise faster than wages,’ he explained.

The top 20 county housing markets least affordable in the first quarter of 2016 compared to their historic affordability norms included counties in Denver, New York City, Omaha, Nebraska, Austin, Dallas, San Francisco and St. Louis.

The five most populated county housing markets less affordable than their historic norms were Kings County, New York Brooklyn, Dallas County, New York County, New York Manhattan, Alameda County, California in the San Francisco metro area, Oakland County, and Michigan in the Detroit metro area.

The top 20 county housing markets most affordable in the first quarter of 2016 compared to their historic affordability norms included counties in Boston, Baltimore, Birmingham Alabama, Providence, Rhode Island and Chicago.

The five most populated county housing markets still more affordable than their historic norms were Los Angeles County, Cook County, Chicago, Harris County Texas, Maricopa County Arizona and San Diego County.

Nationwide in the first quarter of 2016, the average wage earner needed to spend 30.2% of monthly wages to make monthly mortgage payments including property taxes and insurance on a median priced home at $199,000, up from 26.4% of average wages needed to buy a median priced home in the first quarter of 2015.

When home prices were most affordable nationwide in the first quarter of 2012, the average wage earner needed to spend 22.2% of monthly wages to buy a median priced home. When home prices were least affordable nationwide in the second quarter of 2006, the average wage earner needed to spend 53.2% of monthly wages to buy a median priced home.

The top five least affordable counties based on percentage of average wages to buy a median priced home were Kings County and Brooklyn New York at 120.4%, Marin County California at 109.2%, Santa Cruz County California at 106.9%, Manhattan New York at 105.1% and San Francisco County at 95.3%.

The top five most affordable counties based on percentage of average wages to buy a median priced home were Wayne County Michigan at 8.5%, Baltimore County Maryland at 9.2%, Clayton County Georgia at 10.1%, Bay County Michigan at 11.5% and Rock Island Illinois at 12.3%.

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More US housing markets were less affordable in first quarter of 2016
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