TEXAS, USA — The portion of wages required to own a home has risen sharply nationwide, and that trend is playing out in North Texas.
In Collin County, for example, major homeownership expenses gobble up 44.1% of median annual wages, according to a new report from property data firm ATTOM.
The portion of average wages nationwide required for major home-ownership expenses has risen this quarter to 31.5% as the median price of a single-family home has hit a new high of $349,000 and 30-year mortgage rates have shot up to well over 5%, according to ATTOM.
In Collin County, the median home sales price in the second quarter is $525,000, and the median yearly wage is $77,766. With year-over-year wage growth of 5.7% and year-over-year median home price growth of 28%, the gap is getting worse in the county just north of Dallas.
Homeownership takes an even bigger bite out of wages in Denton County, at 51.3%. The home of the University of North Texas and Texas Woman’s University has a median home sales price in the second quarter of $450,00 and a median yearly wage of $58,357. Home prices grew 21.7% year over year, and wages grew 6.1%
Nationwide, ATTOM’s report shows that median-priced single-family homes are less affordable in the second quarter of 2022 compared to historical averages in 97% of counties across the nation. That was up from 69% of counties that were historically less affordable in the second quarter of 2021, to the highest point since 2007, just before the housing market crashed during the Great Recession of the late 2000s.
“Extraordinarily low levels of homes for sale combined with strong demand have caused home prices to soar over the last few years,” said Rick Sharga, executive vice president of market intelligence at ATTOM. “But homes remained relatively affordable due to historically low mortgage rates and rising wages. With interest rates almost doubling, homebuyers are faced with monthly mortgage payments that are between 40 and 50 percent higher than they were a year ago – payments that many prospective buyers simply can’t afford.”
The report determined affordability for average wage earners by calculating the amount of income needed to meet major monthly homeownership expenses — including mortgage, property taxes and insurance — on a median-priced single-family home, assuming a 20% down payment and a 28% maximum “front-end” debt-to-income ratio. That required income was then compared to annualized average weekly wage data from the Bureau of Labor Statistics.
Compared to historical levels, median home prices in 560 of the 575 counties analyzed in the second quarter of 2022 are less affordable than in the past. The latest number is up from 459 of the same group of counties in the first quarter of 2022, 397 in the second quarter of 2021 and just 251, or less than half, two years ago.
That increase has continued as the median national home price has spiked 16% over the past year while average annual wages across the country have grown just 6%.
Returning to North Texas’ data, Dallas County had the lowest percentage of median wages going toward home ownership, at 30.4%. The median wage in Dallas County is $78,910, and the median second-quarter sales price is $363,287. Wages are growing in Dallas County at 5.3% year over year, and home prices grew 19.8% in the past year through the second quarter.
In Tarrant County, the portion of wages required to buy a house is 35.5%. The median wage in Tarrant is $63.687 and the median second-quarter sales price is $337,075. Wages are growing in Tarrant County at 4.7% year over year, and home prices grew 20.6% in the past year.
Here’s ATTOM’s heat map showing county-by-county breakdowns nationwide.
And here’s a snapshot of three major counties in other parts of Texas:
- Median yearly wages: $84,344
- Q2 2022 median sales price: $630,707
- Percentage of wages to buy: 47.1%
- YoY wage growth: 9.5%
- YoY median home price growth: 21.1%
- Median yearly wages: $69,472
- Q2 2022 median sales price: $515,625
- Percentage of wages to buy: 47.6%
- YoY wage growth: 4.7%
- YoY median home price growth: 22.2%
- Median yearly wages: $76,791
- Q2 2022 median sales price: $315,000
- Percentage of wages to buy: 27.4%
- YoY wage growth: 2.9%
- YoY median home price growth: 14.7%