The housing affordability decline accelerates as the gap between housing prices and wages continues to widen. As a result, the number of counties in the United States where affordability fell below historic averages more than doubled. A year ago there were 13 counties below the historic affordability average and today that number stands at 29.
ATM Data Solutions shows that since 2012 average home prices increased by 60%. During the same period wages went up a measly 1%.
Last year home prices accelerated even faster. According to Zillow home prices jumped 6.5% year over year marking the fastest rise since 2006.
As you might expect the least affordable counties are exactly the ones that populate the front pages for setting practically daily record high prices for properties. New York County, Dallas County, and San Francisco ( Alameda county) lead as the metropolitan areas with the lowest affordability compared to historic norms.
Factor Contributing to Home Affordability Decline
The low housing inventory continues to contribute to increasing housing prices and there seems to be no relief in sight. Last month the commerce department reported that housing starts fell in November by 4.6% from the previous month to a seasonally adjusted annual rate of 863,000.
While interest rates are still low they are projected to increase for the foreseeable future and continue to weigh negatively on affordability.
In addition “CoreLogic recently forecast home prices to climb 4.6% from October 2016 to October 2017.”