During the second quarter of this year, U.S. home prices reached their least affordable level in about 10 years.
That’s according to the U.S. Home Affordability Report, an analysis by Irvine, Calif.-based ATTOM Data Solutions which attributes the problem to soaring home prices coupled with weak wage increases.
The Q2 2018 report, which compares median home prices and the percentage of income needed to purchase that house, found that prices are less affordable than historic averages in 59 percent of local markets.
Nationwide, ATTOM’s data shows that the median home price of $245,000 in the second quarter of 2018 was up 4.7 percent, compared with that price in the second quarter of 2017, above the average weekly wage growth of 3.3 percent. Since bottoming out in the first quarter of 2012, median home prices nationwide have increased 75 percent, while average weekly wages have increased 13 percent during the same period, according to ATTOM.
When homes are less affordable, buyers must make more trade-offs to become homeowners. A recent survey by Trulia of home buyers by generation found that millennials are more likely to compromise on home features to live in their ideal neighborhood. Eighty-four percent of millennials would be willing to give up a home feature to live in their ideal neighborhood, while 35 percent of baby boomers and 22 percent of Gen Xers say they wouldn’t compromise on a home feature when looking in their ideal neighborhood.
About one-third of millennials are willing to give up a garage, a recently updated kitchen or some square footage to live in their ideal neighborhood. Nearly one in four millennials would be willing to accept a higher crime rate for their ideal home, while only 15 percent of baby boomers said they would accept a neighborhood with a higher crime rate to get the house they want.