In five counties in America, the average worker would have to spend his entire salary — or more — just to afford the mortgage payments on an average home in the area.
In the first quarter of 2015, buying a home was at its most affordable level in two years, according to a joint report from real estate analytics firm Clear Capital and real-estate research firm RealtyTrac — which analyzed affordability using average weekly wage data from the Bureau of Labor Statistics and average prices for single-family homes and condos from 582 counties across the country. It now takes 36.5% of the average worker’s total wages to make monthly house payments for the average home; in 2006, it took about 70%.
“Affordability is a key metric in determining the overall health of a housing market as it largely represents the barrier to entry for first-time home buyers,” said Alex Villacorta, Ph.D., vice president of research and analytics at Clear Capital, in the report. “First-time buyers represent the ‘fuel’ for which overall market growth is determined due to the fact that this demand segment starts a chain reaction that allows existing homeowners to sell and move-up thereby churning the housing market and price growth.”
