Understanding Homeownership Costs and Affordability Trends in 2024
Recent data reveals that key expenses related to homeownership, such as mortgage payments, property taxes, and insurance, account for 32.5% of the average national wage of $74,698. This percentage shows little fluctuation from the previous quarter’s figure of 32.7%, reflecting a 1.1% increase compared to Q1 2024, where homeownership costs consumed 31.4%. Notably, this marks a significant rise from Q1 2021, when only 27.4% of wages were required for these costs.
Rob Barber, CEO of ATTOM, noted, “Home affordability is in a holding pattern this quarter, financially stressful for average wage earners but not changing much. This is not unusual during the winter lull when home prices level out. A recent small decline in mortgage rates surely hasn’t hurt either for fledgling buyers.”
Regional Disparities in Home Affordability
The analysis conducted across 574 counties with populations exceeding 100,000 has unveiled stark disparities in home affordability across the United States:
Least Affordable Markets
- Kings County, N.Y. (Brooklyn): 109.5% of wages needed
- Maui County, Hawaii: 101.5%
- San Luis Obispo County, Calif.: 100.1%
- Orange County, Calif.: 97.8%
- Marin County, Calif.: 97.5%
Most Affordable Markets
- St. Lawrence County, N.Y.: 10.3% of wages needed
- Mercer County, Pa.: 10.4%
- Peoria County, Ill.: 11.2%
- Jefferson County, Ala.: 11.3%
- Cambria County, Pa.: 11.5%
Despite a quarterly decline of 1% in the national median home price to $351,000, this figure remains 5.2% higher than what it was in Q1 2024. Around 75% of counties observed annual price increases, with Suffolk County, New York, experiencing the most significant growth at 11.9%. Conversely, Alameda County, California, faced the largest decline at -11.2%.
Barber warns that while seasonal patterns may influence the market, broader economic uncertainties could significantly impact future pricing trends. “With so much economic uncertainty these days connected to investment markets, federal policy shifts and very mixed economic forecasts, it is anyone’s guess how much prices will move,” he added.
Wage Growth Not Keeping Pace with Housing Costs
The report further highlights a troubling trend: housing costs are notably outpacing wage growth. In 47% of the counties examined, home prices have risen faster than earnings, leading to a scenario where the average prospective homebuyer now requires an annual income of $86,611 to afford a home. This requirement exceeds the average wages in 86% of the studied markets. For instance, high-cost areas like Manhattan demand required incomes exceeding $386,000.
When comparing current affordability to pre-pandemic levels, a staggering 96.5% of counties are currently less affordable than historical norms, an alarming shift from just 4.2% in Q1 2021.
For a comprehensive view of the findings, readers can access the full report here.