An improving economy and spiking mortgage rates could be hindering your clients’ ability to afford a house.
During the third quarter of 2018, U.S. home prices hit their lowest level of affordability since 2008, according to Attom Data Solutions' Home Affordability Report. More than three-quarters of the 440 counties analyzed in the survey posted an affordability index below their historical averages.
"Rising mortgage rates have pushed home prices to the least affordable level we've seen in 10 years, both nationally and at the local level,” Daren Blomquist, senior vice president at Attom Data Solutions said in a statement. “Close to one-third of the U.S. population now lives in counties where buying a median-priced home requires at least $100,000 in annual income.”
To determine affordability, the amount of income needed to make monthly house payments was calculated, assuming a 3% down payment and a 28% maximum front-end debt-to-income ratio.
Here's a look at the 12 cities with the biggest gap between the current wages needed to buy a home and the historical average. The Attom data is based on counties with at least 500 home sales and where the annual income needed to buy is greater than the local average salary.
Multiple counties in the Denver-Aurora-Lakewood, Colorado, and San Francisco-Oakland-Hayward, California, metropolitan statistical areas made the list and are combined in the rankings.