The number of counties around the country where homes are less affordable than their historic norms rose 7 percent in Q1 of 2016 from a year earlier, according to RealtyTrac. This increase brings the total number of counties that are less affordable than their historic norms up to 9 percent.
The study looked at 456 U.S. counties accounting for a population of 221 million and based the affordability on the percentage of average wages needed to make monthly house payments on a median-priced home with a 30-year fixed rate and 3 percent down payment, including property taxes and insurance.
Denver, New York City, Omaha, Austin, Dallas, San Francisco, and St. Louis were all located in the top 20 county housing markets that were ranked as the least affordable. Areas like Denver, New York City, and San Francisco are probably not much of a surprise, but not too many people probably expected to see Omaha and St. Louis on the list.
Conversely, Boston, Baltimore, Birmingham, Providence, and Chicago were among the top 20 most affordable markets in the first quarter of 2016 as compared to their historic affordability norms.
Overall, 30.2 percent of monthly wages was needed on average to make monthly mortgage payments on a median priced home of $199,000. This total is up from the 26.4 percent of average wages needed to buy a median-priced home in the first quarter of 2015. This is compounded by the fact that home prices are growing faster than wages in 61 percent of markets, or 276 of the 456 counties analyzed by RealtyTrac for the report. Los Angeles was the most-populated county housing market where price growth outpaced wage growth; it saw a 5 percent median home price growth and 3 percent average wage growth.
To view the full report and accompanying inforgraphics, click the link below.