Home prices have been increasing in recent months, which is great news for sellers, but worrying news for buyers. As homes become less affordable, there’s a risk of large segments of the population missing out on the property ladder. The economy has been growing throughout 2018, but some areas, such as the house market, have outpaced wage increases.
New data reveals that the home sales market is now more unaffordable than it has been at any point in the last decade.
ATTOM Data Solutions Releases New House Market Statistics
When following the housing market, you need to have the data that allows you to make the right financial decisions. ATTOM Data Solutions is one of the most trusted data sources for the real estate market, and their quarterly reports are widely read by investors and the top industry analysts.
According to the company’s latest report, home prices outpace wage increases in more than half of all local markets. Parts of California, Oregon, Washington, Massachusetts, Florida, Texas, Arizona, and New Mexico are the worst hit. Washington is currently one of the most expensive markets overall.
In the Seattle-Tacoma-Bellevue area of Washington, year-on-year median house price growth was 16.2%, compared to a median wage increase of just 3.5%. The situation is largely the same when looking at the rest of Washington and the West Coast.
In Colorado, another notoriously expensive housing market, the figures were similar. Denver median house price growth was 10.3%, while wages in the region increased just 3.7%. However, there are outliers to be found. Boulder, Colorado experienced median house price growth of just 5.7%, compared to 4.6% annual wage growth.
75% of Average Wage Earners Fall Outside of Affordability Standards
The biggest danger for sellers is that decreasing affordability will eventually lead to lower demand. It’s not just a question of prices, but also the cost of borrowing. Federal rate increases will make mortgages less affordable in the next two years, reducing the home buyers pool when compared to today.
As it is, median-wage earners in 75% of real estate markets are outside of the affordable range. If you are thinking of selling, then now is the time to start the process. Timing is also important if you’re a buyer, because prices are only likely to go up in the mid-term future.
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