Homeownership in the United States has grown increasingly challenging, with affordability levels dipping below historical averages in nearly every corner of the country. According to the latest U.S. Home Affordability Report by ATTOM, single-family homes and condominiums are now more expensive than ever, making it nearly impossible for the average wage earner to afford a home in most major markets.

Only 1% of the 578 counties analyzed in the study remain more affordable than their long-term averages. For the rest of the country, the numbers paint a stark picture of rising prices and stagnating wage growth, with home expenses continuing to eat up a substantial portion of household income.

The third quarter of 2024 marked a turning point where the cost of homeownership—driven by soaring prices and high-interest rates—required 33.5% of the average national wage. This figure far surpasses the 28% threshold that lenders typically use to evaluate mortgage eligibility, signaling that the current housing market is placing an unsustainable burden on many families.

Median Prices Remain Elevated, but Growth Slows

The national median home price has surged to $365,000, with mortgage rates hovering around 6%. Despite the high costs, the rate of home price growth in the third quarter has decelerated compared to the previous quarter, giving some hope that the market might begin to stabilize. This modest decline in the pace of growth is, in part, due to rising wages, which increased by 3% nationally. While this growth hasn’t yet translated into greater affordability for most buyers, it represents a move in the right direction.

The typical expenses associated with homeownership—including mortgage payments, property taxes, and insurance—are now out of reach for the average household in 575 out of 578 analyzed counties. The report underscores a growing affordability gap that is particularly acute in high-population regions like Los Angeles County, Chicago’s Cook County, and Maricopa County in Phoenix.

For prospective buyers, there’s a glimmer of hope. The Federal Reserve’s recent 50-basis point cut to the federal funds rate may ease mortgage costs slightly. However, the true benefit will depend on how the housing market responds. If demand surges as a result of lower rates, prices could continue their upward trajectory, making affordability a moving target.

Counties Where Homeownership Costs Are Manageable

While the affordability crunch is felt nationwide, some populous counties still offer a reprieve. Notable examples include:

  • Harris County (Houston, TX)
  • Wayne County (Detroit, MI)
  • Philadelphia County (Philadelphia, PA)
  • Cuyahoga County (Cleveland, OH)
  • Allegheny County (Pittsburgh, PA)

These counties are among the few where the cost of homeownership remains within the bounds of typical income levels. For homebuyers eyeing these markets, the stability in pricing can provide an entry point, albeit a narrow one, in a landscape where prices continue to push higher.

Shifts in Homeownership Dynamics: Which Households Are Driving the Market?

The face of American homeownership has evolved significantly over the last decade. A closer look at the Census Bureau’s American Community Survey data reveals shifting patterns among various family household types. While multigenerational households have seen a 4.9 percentage point increase in ownership, it’s the single-parent households that have experienced the most notable growth, climbing by 5.7 percentage points since 2012.

Despite this rise, single-parent households remain at the bottom of the homeownership spectrum, with only 41% achieving ownership status. The financial strain on these families is compounded by rising home prices and stagnant income growth, pushing their estimated home price-to-income ratio to precarious levels.

By contrast, married couples with children have seen a steady 4.5% rise in homeownership, reaching 78% by 2022. Historically low mortgage rates in 2021 fueled much of this growth, allowing families to navigate the market despite escalating prices. However, sustaining this trend appears increasingly unlikely as mortgage rates remain elevated.

The Challenge of Homeownership for Single-Parent Families

Single-parent families are uniquely vulnerable in today’s housing market. For these households, the cost of homeownership can often exceed five times their income, creating an immense financial burden. This staggering home price-to-income ratio highlights the precarious nature of homeownership for many single parents, making it difficult to build equity or maintain long-term financial stability.

The situation is markedly different for multigenerational households, where pooling of resources has enabled many to secure more affordable homes. By combining incomes and sharing expenses, these families have been able to lower their overall cost burdens, making homeownership a more realistic proposition. This trend underscores the growing necessity for creative financial solutions in an increasingly unaffordable housing market.

Married Couples Without Children: A Plateau in Homeownership

The one group that has bucked the trend is married couples without children. Despite experiencing a dip in homeownership rates over the past decade, this demographic remains the most stable in terms of housing tenure. Currently, 84% of these households own their homes, reflecting little change from a decade ago.

For these families, homeownership rates have been buoyed by relatively higher incomes and fewer dependents. The plateau in homeownership can be attributed to the group’s greater flexibility in housing choices, allowing them to navigate market fluctuations more effectively than other household types.

Key Takeaways: The Future of Housing Affordability

The outlook for U.S. home affordability remains uncertain. While wage growth and a slight cooling in the pace of home price appreciation are positive indicators, the overarching trends still point to a market that is out of reach for many average-income earners. As affordability continues to erode, especially in the nation’s largest counties, prospective homebuyers will need to weigh their options carefully and consider alternative paths to homeownership.

  • Low mortgage rates alone are not a panacea: Even if interest rates decline further, persistent demand and limited inventory could keep prices elevated.
  • Alternative housing solutions may become more common: Multigenerational living and shared equity models could grow in popularity as families search for more affordable ways to enter the market.
  • Targeting regions with better affordability: Prospective buyers should focus on counties where affordability remains closer to historical averages.

The housing market’s future trajectory hinges on a delicate balance of interest rates, wage growth, and demand dynamics. Without significant policy interventions or shifts in supply, homeownership is likely to remain a financial stretch for many, making affordability a key concern for the foreseeable future.

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