Median home prices remained unaffordable for average wage earners in El Paso County in the fourth quarter of 2019, a new report from ATTOM Data Solutions shows.
The average annual income in the county for the second quarter of 2019, the latest shown in the report, was $51,389. But to buy a home priced at $305,000 — the county’s median sales price in Q4 — a wage earner needed an annual income of $74,467, according to the report.
ATTOM Data Solutions, which curates and provides property data on more than 155 million U.S. residential and commercial properties, releases its home affordability report quarterly.
According to the latest report, El Paso County is one of 71 percent of U.S. counties where median home prices in the fourth quarter of 2019 were unaffordable for average wage earners.
The report measures affordability on an index where a score under 100 represents lower affordability than historic averages. On the affordability index, El Paso County scored 87 in Q4.
Denver County’s affordability index score was even lower, as was Pueblo County’s score: Both stood at 80 in the last quarter of this year.
The affordability index was derived by calculating the amount of income needed to make monthly house payments, including mortgage, property taxes and insurance, on a median-priced home, assuming a 3 percent down payment and a 28 percent “front end” debt-to-income ratio — meaning that the buyer would not be spending more than 28 percent of his or her income on the house payment. Average 30-year fixed interest rates from the Freddie Mac Primary Mortgage Market Survey were used to calculate monthly house payments.
That required income was then compared to annualized average weekly wage data from the Bureau of Labor Statistics.
Although the $305,000 median sales price in El Paso County decreased 2 percent in Q4 from Q3’s median prices of $310,000, the median price was up 9 percent from Q4 2018, significantly outpacing wage growth.
Within the county, annualized median wages grew only 1 percent from Q1 to Q2 and only 3 percent year over year, according to the report.
The median monthly mortgage payment in El Paso County in Q4 2019 stood at $1,738, down 1 percent from the previous quarter.
Nationwide, home prices rose by 9 percent year-over-year in Q4 2019.
“The typical home remained a financial stretch for average wage earners,” said Todd Teta, chief product officer with ATTOM Data Solutions. “However, homes were actually a bit more affordable because of declining mortgage rates, combined with rising pay to overcome the continued price run-up.
“As long as people are earning more money and shelling out less to pay off home loans, the market should remain strong with prices continuing to rise, at least in the near term. Those are big ifs, but for now this report offers some decent findings for both home seekers and home sellers.”
Nevertheless, as in El Paso County, home price appreciation outpaced average weekly wage growth in 369 of the 486 counties analyzed, and in 47 percent of markets, including El Paso County, homes were less affordable than their historic affordability averages.
The nationwide median home price of $257,000 in he fourth quarter of 2019 would require an annual gross income of $67,647. According to the most recent data from the Bureau of Labor Statistics, the average annualized wage in the nation is $58,214, making a median-priced home not affordable for an average wage earner.
View the full report here.