April 14, 2019

Affordability part of Realtor® Party’s advocacy for homeowners


2019 NETAR President

Housing affordability is getting attention in the media, and it has caught the eye of policy makers in Washington, D.C. The core issue was illustrated in the headline for Attom Data Solutions’ Q1 Housing Affordability Report. Their findings concluded the average wage earner could not afford a median-priced home in 71% of U.S. housing markets.  Fortunately for us, our local markets are not part of that 71%.

Elected officials in Washington get nervous when they hear the average wage owners cannot afford a piece of the American Dream in 71% of the U.S. markets. They take notice because they also know that you rarely have a thriving economy without a thriving housing market.

Of course, not all markets were part of Attom’s analysis. They looked at 473 counties nationwide. Among the 335 that flunked on affordability were Los Angeles County, CA, Maricopa County AZ, San Diego County, CA, Orange County CA and Miami-Dade County, FLA. The economies and housing markets of these metro areas are hardly good examples of the rest of the nation, but they exert an influence on U.S. economy.

The only local counties in the analysis were Washington and Sullivan.

Attom’s analysis found affordability in Sullivan County has declined because home prices have increased faster than wages. Even with declines in the last four quarters, the average wage earner could still afford a median priced home. Sullivan County is currently an anomaly in the scope of affordability economics. During the first three months of this year, it took 19% of the annualized Q1 wage to buy a median-priced home.

Washington County homes were more affordable during the first three months of this year even though it has – on average – the most expensive homes in the Tri-Cities region. Wages in that county have increased faster than home prices. So far this year it took 25.7% of the annualized Q1 wage in Washington County to buy a median priced home.

Home ownership costs go beyond the purchase price. Things like property taxes and fees, flood insurance – to name just a few – add to the total share of household income for housing. 

The traditional affordability threshold is housing cost should be about 30% - or less - of the individual’s income. Although most of the counties in our region were not part of the Attom analysis, affordability can be also be checked by looking at Census reports.

Those reports show that 75% of the homeowners with a mortgage in Carter, Unicoi, and Washington counties - the Johnson City Metropolitan Statistical Area (MSA) - pay 30% or less of their monthly household income for housing.  In the four counties of the Kingsport-Bristol MSA (Sullivan and Hawkins counties in NE TN and Scott and Washington counties in SW VA) 76% of mortgaged households are under the 30% benchmark.

These percentages mean housing affordability is in pretty good shape for current homeowners and affordability accounts for 66% of the occupied housing in Washington County and 73% in Sullivan County. Will housing remain in its current affordable range? That question is part of the motivation behind the Northeast Tennessee Association of Realtors® (NETAR) and the National Association of Realtor® (NAR) dedication as advocates for homeowners, property rights and a vibrant housing market through the ongoing nonpartisan efforts of the Realtor® Political Action Committee (RPAC) on the local, state and national levels.