Can’t buy a home? Study shows Triangle’s affordability crisis is worsening — and fast
The percentage of average wages needed to buy a home in the U.S. is at its highest point since the 2008 housing market collapse, a new study says, and Wake County is experiencing one of the worst affordability crises in the nation.
The Raleigh area is one of the places where the gap between average wages and median home prices is widening fastest, according to ATTOM’s first-quarter 2022 U.S Home Affordability Report.
In Wake County, the average household income is $67,500, the report estimates, and the median price of a home is $410,000. So the average wage earner would need to spend 31.7% of their income to get a mortgage on a median-price home.
Nationwide, it’s 26.3%. Common lending standards consider 28% the ceiling for affordability.
“Throughout the pandemic, a glut of buyers has flooded the market, chasing an historically limited supply of homes for sale,” the report said. “This high demand was due in part to mortgage rates hovering around 3%, and in part because of the flight of urban renters leaving congested virus-prone areas for the perceived safety of a house and yard and the space for growing work-at-home lifestyles”
Here’s where the rates stand around the Triangle, where only Durham was considered affordable:
- Wake County: 31.7% of wages needed to buy a home. Wages are up 6.2% and median home prices are up 29.2% in past year.
- Durham County: 22.2% of wages needed to buy a home. Wages are up 6.4% and median home prices are up 25.5% in past year.
- Orange County: 34.7% of wages needed to buy a home. Wages are up 5.7% and median home prices are up 9.0% in past year.
- Johnston County: 33.6% of wages needed to buy a home. Wages are up 5.5% and median home prices are up 25.4% in past year.
Price of residential real estate setting records in NC, nation
Homes are less affordable than ever in 79% of the country, the highest proportion of the nation experiencing an affordability crisis since 2008, according to the report.
One year ago, that figure was at 38%. The 79% marks the highest point since mid-2008, when the housing bubble burst, ATTOM says.
The spike in home prices has escalated over the past year, pushing the national median up 16% year-over-year to a record-high $320,000 in the first quarter of 2022. Average wages rose just 7% in the same time frame.
Among the 49 largest-population counties in the nation, Wake County ranked second this quarter for the largest markup in prices since 2021. Median home prices were up 29%.
The study by ATTOM, a company specializing in real estate data, explored the amount of income average wage workers need to pay for homeownership. Their calculations factored in the cost of a 20% down payment, a 30-year fixed-rate mortgage, property taxes and homeowners insurance.
Rick Sharga, executive vice president of market intelligence for ATTOM, said the data came as no surprise.
“Historically low mortgage rates and higher wages helped offset rising home prices over the past few years, but as home prices continue to soar and interest rates approach 5% on a 30-year fixed rate loan, more consumers are going to struggle to find a property they can comfortably afford,” Sharga said in the report.
This story was originally published April 8, 2022 at 1:49 PM.
