Yesterday, I discussed how the median price YoY on existing home sales is almost 2 times average hourly earnings growth, a sign of the growing housing affordability problem in the US.
Of course, housing affordability varies across the country. According to Attom’s Home Affordability Study, the west coast (California, Oregon and Washington) is unaffordable for many households. Florida also is losing affordability compared to historical affordability.
Annual growth in median home prices outpaced average wage growth in 275 of the 432 counties analyzed in the report (64 percent), including Los Angeles County, California; Maricopa County (Phoenix), Arizona; San Diego County, California; Orange County, California; and Miami-Dade County, Florida.
Median home prices not affordable for average wage earners in 75 percent of local markets
An average wage earner would not qualify to buy a median-priced home in 326 of the 432 counties (75 percent) analyzed in the report based on a 3 percent down payment and a maximum front-end debt-to-income ratio of 28 percent.
Counties where an average wage earner could not afford to buy a median-priced home in Q2 2018 included Los Angeles County, California; Cook County (Chicago), Illinois; Maricopa County (Phoenix), Arizona; San Diego County, California; and Orange County, California.
Rather than try to increase the supply of housing (both owner-occupied and rental), the Federal government will push to ease credit standards (now called “widening the credit b box”). While not as “wide” as the housing bubble years of 2004-2007, each indicator has been gradually easing to meet higher home prices.