ATTOM Data Solutions' quarterly U.S. Home Affordability Report compares current conditions against historical averages in 581 counties across the country. The report determines affordability by calculating the amount of income an average wage earner would need to earn to comfortably afford homeownership expenses on a median-priced, single-family home. In the fourth quarter of 2022, affordability worsened.
In fact, the report found typical homeownership expenses would require 32.3 percent of the average wage, that's up from 23.8 percent last year at the same time. It's also above what's considered affordable by traditional lending standards. But while homeownership got more expensive in 2022, there may be relief on the way.
Rick Sharga, executive vice president of market intelligence at ATTOM, says the new year may bring improvement. “There is a scenario where affordability improves as we move through 2023,” Sharga said. “Wage growth continues to be strong; home prices appear to have stabilized and are even going down slightly; and mortgage rates have peaked for this cycle, and could go down gradually next year. If those conditions remain in place, the affordability picture is much brighter for a lot of potential buyers.”
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