Rising home prices threaten to chill one of metro Atlanta’s most valuable selling points: the affordability of housing.
In four of the five core counties of the region, it takes more than 25 percent of average wages to make monthly payments on a median-cost home, according to a parsing of the data by Attom Data Solutions.
Among core counties, the mismatch of income and price is worst in Gwinnett County, where 31 percent of wages are needed.
The two big variables in the equation – consumer income and house prices – have simply not been moving in tandem, said Daren Blomquist, senior vice president at Attom.
“While home price appreciation in the second quarter accelerated to the fastest pace in more than three years, wage growth turned negative,” he said. “That combination of accelerating home price growth and slowing wage growth, along with (higher) mortgage interest rates, eroded home affordability nationwide.”
In some places, average wages have actually gone down.
So even if Atlanta looks better than many cities, the shift here hurts because it feels like a bigger change, Blomquist said.
“Buying a home now takes a bigger bite out of income than what they would expect based on historical market trends,” he said.
Atlanta is not unique. According to Blomquist, 87 percent of all markets show median home prices rising faster than wages. Since 2011, home prices nationally are up 69 percent while average weekly wages have increased 9 percent, he said.
But metro Atlanta’s population growth – several hundred percent over the past two decades – is largely the result of transplants from all over the country joining in and adding to a vibrant economy. One draw has been relatively cheap housing, and lots of it.
That makes the latest figures troubling, said Mekael Teshome, vice president and economist for the PNC Financial Services Group. “If affordability erodes, that weakens one of the competitive advantages that Atlanta has.”
Many a corporate transfer has delighted in the home they could buy in Atlanta with profits from the sale of a much older, smaller house back in a place like Chicago, New York or Los Angeles. Not that Atlanta is yet challenging those denser, older, more expensive areas for priciness.
For instance, it takes 50 percent of a median income earner’s pay to buy a median-priced new home in Los Angeles, according to Zillow.
Teshome doesn’t expect Atlanta area prices to plateau, so the fix has to come from the other variable.
“Looking six months or more ahead, I do believe that wages will pick up,” he said. “If they don’t, that would be a problem.”
But the lure could be less lustrous – especially for people who are already here, renting apartments and relying on their Atlanta-level incomes to make a purchase.
It is the lowest level of affordability in nearly nine years, according to Attom calculations.
Not surprisingly, the areas hit hardest by the housing crash and recession have recovered the least and, largely because of still-depressed prices, remain the most affordable homes.
For example, Clayton County, where foreclosures and plunging home values were epidemic, is more affordable now than it has historically been, according to the Attom calculations.
The median sales price of a home in Clayton was $81,000 in the second quarter of this year – less than one-third the median in Fulton. Yet even in Clayton, the rebound from the bottom has meant prices have been rising faster than wages.
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THE PAYCHECK BITE
Share of average income needed to buy a home, by county:
Source: Attom Data Solutions
PRICES VS. WAGES
Median price/annual price growth/wage growth
DeKalb: $189,900… 0%… 2%
Fulton: $270,000… 5%… -1%
Gwinnett: $210,000… 8%… -2%
Cobb: $227,750… 3%… -2%
Clayton: $81,000… 17%… 5%
Source: Attom Data Solutions