Home affordability for average wage earners in the US has increased in the second quarter of 2020, according to figures from ATTOM Data Solutions.
Data from the research firm’s second-quarter 2020 US Home Affordability Report revealed that median home prices of single-family homes and condos in the second quarter of 2020 are more affordable than historical averages in 49% of US counties with enough data to analyze – up from 31% a year ago.
The report determined affordability for average wage earners by calculating the amount of income needed to make monthly house payments — including mortgage, property taxes and insurance — on a median-priced home, assuming a 3% down payment and a 28% maximum “front-end” debt-to-income ratio.
Compared to historical levels, 200 of the 406 counties that ATTOM analyzed in Q2 are now more affordable, up from 126 of the same group of counties in the second quarter of 2019. The research firm said that the gains have come as “higher wages, along with cheaper mortgage costs resulting from declining interest rates, outweigh ongoing price increases that commonly have exceeded 5% in the current quarter.”
“The latest affordability numbers reveal a win-win situation for sellers, as well as buyers,” said Todd Teta, chief product officer with ATTOM Data Solutions. “Prices are rising again around the country during the current home-buying season, despite worries that the economic impact of the coronavirus pandemic would halt the nine-year runup in home values. But a combination of wage gains and declining mortgage rates are helping to override the increases and make homes more affordable in large swaths of the United States.”
Teta said that virus pandemic concerns are still “quite valid and may show up in the coming months, which could hurt prices as well as affordability.”
“That remains a significant potential cloud hanging over the market,” said Teta. “But as of now, things are looking up for people on both sides of the buying equation.”