Photo: Robert Clark
Thinking of buying a home in Brooklyn? Better start saving now, because according to a new report released by ATTOM Data Solutions, it’ll cost over 125 percent of average wage to buy in the trendy borough. And it isn’t just Brooklyn that’s unaffordable, it’s a growing national problem.
The national median home price was up almost 8 percent from last year to $253,000 in the second quarter of 2017. This was the biggest annual gain observed in the last three years. National median home prices recorded their least affordable level since the third quarter of 2008, says ATTOM, the firm behind country’s largest multi-sourced property database.
Meanwhile, national average weekly wages dropped 1.4 percent year-over-year to $1,067, the biggest annual decrease in nearly six years.
Nationally, buying a median priced home would cost about 32 percent of average earnings during the second quarter of 2017. But in Brooklyn, homebuyers would need to pay over four times the national average weekly salary to buy a home, according to ATTOM’s data.
In addition to Brooklyn, homebuyers in San Francisco, CA, Santa Cruz, CA, Key West, FL and Summit Park, UT need to earn above 100 percent of the national average salary to afford a home in their metro areas.
Median home prices have risen 69 percent nationwide while average weekly wages have only grown 9 percent since the first quarter of 2012 — when home prices “bottomed out,” says ATTOM.
“Part of the reason for the rapid growth of home prices is due to real estate investors who are not constrained by incomes in the way that local owner-occupant buyers would be. In a broader sense, the overall imbalance between supply of sellable homes and demand for those homes is putting upward pressure on prices,” Daren Blomquist, Senior Vice President at ATTOM, tells BuzzBuzzNews.
And, there is still strong demand from homebuyers who do make more than the average wage, and are able to afford a median priced home to keep pressure on prices, Blomquist says.
“But certainly that demand is limited and as more supply comes on line it could leave the market in an awkward spot if that supply is not affordable to the broader pool of prospective buyers making close to the average wage or below,” Blomquist adds.
During the second quarter of 2017, median home prices grew at a faster annual pace than average weekly wages in 87 percent of the counties analyzed by ATTOM.
In 31 percent of the markets analyzed by ATTOM, homebuyers would have to spend more than 43 percent of average wages to buy a home.
Many of these unaffordable markets tend to be cyclical, and a correction — if not a crash — will come eventually.
“Buyers willing to be patient and also willing to go against the grain can take advantage of the market cycles, even if that means in the short term making some sacrifices when it comes to the quality, size and location of their current housing situation,” Blomquist advises.
Click here to read the entire report.