Home affordability is down in the third quarter of 2017 compared to last year, despite improving from the second quarter of 2017, according to data recently released from ATTOM Data Solutions.
The national home affordability index came in at 100 in Q3, 2017, the lowest national affordability index since the third quarter of 2008. A higher number indicates more affordable housing. In Q3 2008, the index sat at 86, right before the housing bubble burst and the lead-in to the Great Recession.
Since bottoming out nationwide in Q1 2012, median home prices have climbed 73% despite average weekly wages have increased only by 13% over the same period.
In 79% of the counties examined, affordability is worse off now than it was a year ago.
One of the main issues facing housing affordability in the U.S. that the study pointed out was the stagnant wage growth that American workers are suffering through. Housing is becoming increasingly unaffordable due to urban areas exploding in demand, forcing some to head out to the Midwest and American heartland to find affordable housing, driving prices of those homes higher. It’s a self-sustaining cycle that causes housing price creep that outpaces wage growth.
“More sustainable relief for the affordability crunch, however, will need to be some combination of slowing home price appreciation and accelerating wage growth,” said Daren Blomquist, senior vice president at ATTOM Data Solutions, in the statement that was released alongside the study. “Wage growth is outpacing home price growth in about half of all local markets so far this year, an indication that a more sustainable affordability pattern is taking shape in more local markets.”
Housing prices have increased as many as 10 times that of wage growth in several communities when looking at the data from 2012 until now.
In Reno, Nevada, for instance, wage growth since the bottom of the housing market has climbed about 10%, while housing prices have skyrocketed upwards by 158%.
The American dream of home ownership is becoming distant for many Americans, who see housing prices shoot up daily while their wages are unable to keep up.
“Home Affordability Improves in 60 Percent of U.S. Markets in Q3 2017 Compared to Previous Quarter,” ATTOM Data Solutions, October 3, 2017.