A significant portion of the U.S. is becoming increasingly unaffordable for prospective homeowners, according to recent data from real estate analytics firm ATTOM. The analysis, covering April to June, revealed that in 80% of the 589 counties studied, homeowners spend more than the recommended 28% of their wages on housing costs. This includes mortgage payments, property taxes, and homeowners insurance, exacerbating the financial strain on many Americans.
Home prices have reached unprecedented highs this year amid a shortage of affordable properties and mortgage rates hovering around 7%—more than double their level in 2021. The average homeowner, earning an annual income of $72,358, is now spending $2,114 monthly on housing costs. This translates to about 35% of their income, exceeding the recommended 28% threshold. In over a third of the markets analysed, homeowners spend at least 43% of their wages on housing, which ATTOM classifies as “seriously unaffordable.”
“Among the 589 counties analysed, 582, or 98.8%, were less affordable in the second quarter of 2024 than their historic affordability averages,“ ATTOM reported.
The disparity between housing costs and wage growth significantly drives this crisis. “Housing costs have been outpacing incomes since the 1960s,“ said Chris Herbert, the managing editor for Harvard University’s Joint Centre for Housing Studies. This trend is partly due to the increasing land value on which homes are built, which has grown faster than incomes.
ATTOM’s analysis focused on counties with populations of at least 100,000 and at least 50 single-family home and condo sales in the second quarter of 2024. The regions that exhibit the highest concentration of unaffordable housing are as follows:
On the other hand, the following areas offer more affordable homes:
According to Redfin, the national median home sale price hit a record of $397,954 in June, up from $383,000 a year ago. Meanwhile, based on Freddie Mac’s data, the average interest rate on a 30-year home loan is 6.95% from 6.81% a year ago. These rising costs pose a substantial challenge for homebuyers.
“It’s common for these trends to intensify during the spring buying season when buyer demand increases. However, this year’s trends are particularly challenging for house hunters, more so than ever since the housing market boom began in 2012,“ said ATTOM CEO Rob Barber.
The current market conditions have created challenges for both buyers and sellers. Many homeowners benefiting from much lower mortgage rates are hesitant to list their properties, further tightening the housing supply. This reluctance among sellers contributes to the ongoing affordability crisis, as fewer homes are available for purchase when demand remains high.
As affordability continues to erode, the housing market in the United States faces a critical juncture. Potential homebuyers must navigate a landscape of high prices, soaring mortgage rates, and limited supply. While certain regions offer more affordable options, the overall trend is increasing financial pressure on homeowners. As the market evolves, buyers must remain vigilant, explore all available options, and consider the long-term financial implications before making significant housing decisions.
