• Wage growth is up in 72 percent of housing markets, and outpacing home price appreciation in the majority (55 percent) of markets.
  • The average interest rate on a 30-year fixed rate mortgage is down 37 basis points from a year ago.
  • Americans need 35.4 percent of weekly wages to buy on average.
  • Brooklyn is the most unaffordable market, where buyers need 121.7 percent of average weekly wages to buy a median-priced home.

The financial elements of homebuying are improving for most Americans, according to RealtyTrac. Wage growth, home price slowdown and falling interest rates are helping boost affordability in many county-level markets, according to the data firm’s Q2 Home Affordability Index.

Wage growth alone is up in 72 percent of housing markets and outpacing home price appreciation in the majority (55 percent) of markets, according to to index. Home price appreciation actually slowed in 68 percent of markets; the average interest rate on a 30-year fixed rate mortgage is down 37 basis points from a year ago.

Wage growth

Advertisement

 

In 228 out of 417 U.S. counties, wage growth is outpacing annual home price growth. Miami-Dade County, Kings County (Brooklyn) and Bexar County (San Antonio metro) posted incomes rising beyond annual home price appreciation.

Home prices are still rising at higher rates than wages in 189 out of 417 counties. Los Angeles County, Cook County (Chicago) and Harris County (Houston metro) fell short in wage growth as compared to home price growth.

“This is the first time in four years we’re seeing wage growth outpacing home price growth. The first quarter of 2012 was the last time we saw that,” Blomquist said.

The least and most affordable counties

RealtyTrac gauged affordability based on the percentage of average wages required on monthly payments for a median-priced home with a 30-year fixed mortgage rate and 3 percent down, property taxes and insurance included.

While wage appreciation is higher than home price appreciation in Brooklyn, the borough was still the least affordable market in the nation. Brooklyn buyers need 121.7 percent of average weekly wages to buy a median-priced home.

In the north bay of San Francisco, Marin County buyers need 118.1 percent of average weekly wages. San Francisco came in at number four least affordable, requiring 94.6 percent of average weekly wages.

“Our data shows a year ago, home prices in San Francisco were up 20 percent year over year. Now they are up 2 percent,” Blomquist said. “That’s a dramatic slowdown in home price appreciation, but it’s probably better to happen now than for us to continue to see affordability deteriorate.”

The most affordable counties included Clayton County in the Atlanta metro with 10.4 percent of average weekly wages needed to buy. At number two most affordable, Wayne County in the Detroit metro requires just 10.9 percent of weekly wages.

And for the East Coast, Baltimore City buyers only need to fork over 11.6 percent of weekly wages to buy a median-priced home.

Nonetheless, inventory is still a concern. Fewer homes for sale combined with lower interest rates means more people are bidding on a small faction of properties, according to Blomquist.

“As affordability improves, people aren’t necessarily saving money,” he said. “It means they have more buying power and are likely to put in multiple offers.”

Email Jennifer Riner

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×