A recent study by ATTOM Data Solutions has confirmed what we were all beginning to suspect, that a house with a white picket fence and 2.5 children is unattainable by the majority of Americans in the current market. The ATTOM study utilized wage data from the U.S. Bureau of Labor Statistics to determine that a home listed at the median price was too expensive for people in 84% of the 440 counties analyzed.
More concerning, the ATTOM study showed that the median price in 30% of the counties required individuals to have an annual household income of at least $100,000.00. This study was premised on the assumptions that a minimum of 3% of the houses total price would be required as a down payment, and the potential purchaser obtained a 30-year fixed rate mortgage.
This study should be alarming, as it represents an event horizon of sorts as it relates to housing prices and American’s ability to purchase those homes. As noted in another article, the rate of housing price increases has decreased recently (as a result of a unstable global economy, the Federal Reserve’s interest increases, or the increasingly common bond investments as a safe investment), but the housing market remains nearly impossible for the average millennial to break into.
This concern is further bolstered by the fact that the National home affordability measurement has fallen to its lowest point in the last 10 years, and the price of houses increased a vastly faster rate than individual’s wages in 86% of the counties studied. In a surprising turn of events, Denver and the counties surrounding it were identified as the least affordable areas in the United States (beating major metropolitan areas like New York and Los Angeles); this is a consequence of the massive discrepancy between household incomes and housing prices. Part of what contributed to this discrepancy is the fact that Denver is experiencing a tech boom as a result of business-friendly legislation, and many high-income individuals are moving to the area for work (thus the prices of houses increased to math the assets of the people seeking homes).
Surprisingly, the following are the least affordable areas to purchase a house based on the median housing prices and the median income of each county: (1) Denver County, Arapahoe County, and Jefferson County in the Denver area, (2) Tarrant County is the Dallas area, (3) Kent County in the Grand Rapids area, (4) Kings County (Brooklyn), (5) Marin County in the San Francisco area, (6) Santa Cruz County, San Luis Obispo County, and (7) Maui County.
Needless to say, unless housing prices come down, or wages increase, the housing market may very well run out of potential buyers. At the Chernov Team we look for all information that reflects on the current and future state of the housing market. We focus on local areas like Studio City, Sherman Oaks, and Encino as well the national housing market. Knowledge is power and enables us to approach the negotiation table as the most prepared people there. Whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves with the most.