Home price appreciation outpaced wage growth of US market
According to ATTOM Data Solutions’ Q4 2016 Home Affordability Index, the U.S. national affordability index in the fourth quarter was at its lowest level since Q4 2008.
The report also shows that 29 percent of U.S. county housing markets were less affordable than their historic affordability averages in the fourth quarter, up from 24 percent of markets in the previous quarter and up from 13 percent of markets a year ago to the highest share since Q3 2009 — when 47 percent of markets were less affordable than their historic affordability averages.
Nationally the affordability index in the fourth quarter was 103, down from 108 in the previous quarter and down from 116 a year ago to the lowest level since Q4 2008, when the national home affordability index was 102.
Rapid home price appreciation and tepid wage growth have combined to erode home affordability during this housing recovery, and the recent uptick in mortgage rates only accelerated that trend in the fourth quarter,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “The prospect of further interest rate hikes in 2017 will likely cause further deterioration of home affordability next year. Absent a strong resurgence in wage growth, that will put downward pressure on home price appreciation in many local markets.”
Annual home price growth outpaced annual wage growth in 363 of 447 counties (81 percent) analyzed in the report, up from 77 percent of counties in the previous quarter and up from 57 percent of counties a year ago.
Since bottoming out in Q1 2012, the national median home price has increased 60 percent while average weekly wages have increased just 1 percent during that same timeframe.
The most populated counties where home price growth outpaced wage growth were Los Angeles County, California; Harris County, Texas, in the Houston metro area; Maricopa County, Arizona in the Phoenix metro area; San Diego County, California; Orange County, California; Miami-Dade County, Florida; Kings County, New York; and Dallas County, Texas.
Counties with the strongest annual growth in average weekly wages were Woodbury County, Iowa in the Sioux City metro area (15 percent); Maury County, Tennessee in the Nashville metro area (14 percent); Iredell County, North Carolina in the Charlotte metro area (11 percent); Walton County, Georgia in the Atlanta metro area (9 percent); Elkhart County, Indiana in the Elkhart metro area (8 percent); and King County, Washington, in the Seattle metro area (8 percent).