ATTOM CEO Rob Barber noted in the report, "The latest affordability data poses a significant challenge for homebuyers. Rising home prices and relatively high mortgage rates are making housing increasingly unaffordable." He further explained that this trend is exacerbated during the spring homebuying season when buyer demand typically rises. This year is particularly severe, being the most challenging since the real estate market began recovering in 2012.
One major issue is that wage growth has not kept pace with the increase in home prices. ATTOM's report shows that in nearly half of the counties, home prices are rising faster than wages. This disparity is most pronounced in counties such as Los Angeles in California, Cook in Illinois, and Maricopa in Arizona.
In addition to higher monthly mortgage payments, home maintenance costs are also increasing. Combining these expenses, homeowners now spend 43% of their income on housing, which ATTOM considers "severely unaffordable."
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The Western and Northeastern United States are among the least affordable regions. In Santa Cruz County, California, homeowners need to spend 113.8% of the local annual wage on housing costs, meaning many people don't earn enough to cover housing expenses. Similar conditions exist in Kings County, New York, where residents need to spend 111.8% of the local annual wage on housing.
However, the report also offers some positive news. Homeowners in Pennsylvania's Cambria and Schuylkill counties spend relatively less on housing, with annual costs of $20,668 and $27,277, respectively.
Realtor.com Chief Economist Danielle Hale highlighted, "Affordability remains a significant issue for buyers in today’s real estate market." She added that for first-time homebuyers choosing between renting and buying, a recent Realtor.com study found that in 50 major cities, the monthly cost favors renting.
Real estate agent Mike Wall, observing these impacts in Dayton, Ohio, said the national trend of declining housing affordability is "evident." He remarked, "While our area hasn't plunged into an affordability crisis, the effects are not as pronounced as in major metropolitan areas. Compared to cities like San Francisco or New York, Dayton remains relatively affordable, but prices have been steadily rising."
Despite these challenges, Wall noted hope for current homeowners planning to buy another property. With home equity at historic highs, existing homeowners can use this equity to offset some of the burden from rising mortgage rates. Increased down payments indicate that some buyers are taking this route.
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First-time buyers, however, face significant challenges in purchasing new homes. Wall said, "Many are borrowing money from family to cover down payments or transaction costs. Others are adjusting their expectations, opting for smaller or fixer-upper homes that they might have overlooked during market booms." He also noted a growing number of buyers considering less traditional routes, such as rent-to-own or exploring more affordable neighborhoods farther from city centers.
Hale emphasized, "To improve affordability, we need to see more construction." Realtor.com estimates that the U.S. has been short by 2.5 to 7.2 million homes over the past decade to meet household formation needs. Builders are working to address this shortage, seemingly adjusting new homes' locations and features to offer more affordable options.
For instance, in May 2024, 48% of new homes were priced below $400,000, compared to 43% the previous year. Hale said, "While home prices are rising, those seeking affordable housing do have an advantage in today’s market: more choices. In May 2024, the total number of active listings was up 35.2% year-over-year, with a 46.6% increase in homes priced between $200,000 and $350,000. More relatively affordable homes will help ease shoppers from the ever-increasing costs."
