Affordability Crunch: Minimum Salary to Buy Typical Home in San Francisco: $366,582; In Houston: $74,916
HOUSTON — (By Dale King, Realty News Report) — ATTOM Data Solutions has released its third quarter 2018 U.S. Home Affordability Report showing that U.S. home prices in the third quarter were at the least affordable level since Q3 2008 — a 10-year low.
But a close reading of the lengthy document and analysis of its figures show Texas is only tangentially impacted. Lone Star metros escape the bad news largely because of stable wages, large populations, lots of jobs and plenty of land where market-priced homes can be built.
“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,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “Close to one-third of the U.S. population now live in counties where buying a median-priced home requires at least $100,000 in annual income based on our analysis of 440 counties with a combined population of 220 million.”
If you spin the home affordability dial, you’re more likely to land in the Pacific Northwest, a Rust Belt metro, upstate New York or somewhere in California.
For example, this 69-county list was led by the five California Bay Area counties of San Mateo ($377,210 annual income needed to buy a median-priced home), San Francisco ($366,582), Santa Clara ($327,284), Marin ($311,827) and Alameda ($237,760). Following those five California counties were Westchester County, N.Y ($228,937) and Kings County (Brooklyn), N.Y. ($221,993).
All these investments assume a 3% down payment and a maximum front-end, debt-to-income ratio of 28%.
Compared to these wage ranks, the report indicates most Texas homes are a steal. Only segments of Dallas, Fort Worth and Austin demand at least $100,000 in annual salary to get a foot in the door.
Dallas and Fort Worth – at least the portions that reside in Collin County ($108,373) and Denton County ($100,255), demand a paycheck of more than $100 large a year. Portions of those metros in Parker, Johnson, Tarrant, Ellis, Dallas and Kaufman counties are a lot cheaper. In fact, D/FW residents in Johnson, Tarrant, Ellis and Kaufman counties can make the cut for a house with just over a $70,000 a year wage.
The segments of Austin and Round Rock in Travis County require a yearly salary of $112,840 to buy a home. Someone in those cities with a yearly wage of $93,384 can buy a median-price home; in Hays County, about $83,000.
The Houston metro area – covering at least parts of five counties, Montgomery, Harris, Fort Bend, Galveston and Brazoria – seems to be Bargain Central. The highest income to get a mid-range house is required only in Fort Bend, $98,602. Top salary requirements in segments of Houston in other counties are: Montgomery, $84,964; Harris, $74,916; Galveston, $76,954 and Brazoria, $79,766.
Texas totals offer fairly obvious conclusions. Homes are cheaper in the outer suburbs than in the urban core. Homes in Travis County (the urban heart of Austin) are cheaper than ones in Hays County (suburban). Land is more plentiful in the suburbs, so houses are cheaper.
“Several years of well-above-average home price growth has severely impacted housing affordability in the Seattle region, driven largely by our strong economy and rising incomes that have continued to cause prices to appreciate,” said Matthew Gardner, chief economist with Windermere Real Estate, covering the Seattle market.
Some other observations in the report:
Nationwide, the median home price of $250,000 in Q3 2018 was up 6% a year ago, twice the annual growth of 3% in average wages.
Meanwhile the average 30-year fixed mortgage rate is up 15% since Q1 2012 and up 17% just over the past year, according to the Freddie Mac Primary Mortgage Market Survey.
Annual home price appreciation outpaced average weekly wage growth in 378 of the 440 counties analyzed in the report (86%), including Los Angeles County, California; Cook County (Chicago), Illinois; Harris County (Houston), Texas; Maricopa County (Phoenix), Arizona; Miami-Dade County, Florida and Dallas County, Texas.
Among 128 counties with a population of 500,000 or more, those with the lowest affordability indices — least affordable relative to their long-term affordability averages — were Denver County, Colorado (70); Arapahoe County, Colorado in the Denver metro area (73); Tarrant County, Texas in the Dallas-Fort Worth metro area (74); Kent County (Grand Rapids), Michigan (74) and Jefferson County, Colorado in the Denver metro area (75).
The Houston Association of Realtors reported Wednesday that the median home price in Houston in September was $232,500.