Nationwide analysis shows Philly region still affordable for home buyers
Houses in the Philadelphia region generally remain affordable for buyers, foreclosure search engine RealtyTrac reported Thursday. In fact, just 43 of 456 U.S. counties analyzed by RealtyTrac exceeded their normal historic affordability levels in the first quarter of 2016. In the same three months of 2015, 10 counties of the 456 exceeded normal affordability levels, the report said.
Houses in the Philadelphia region generally remain affordable for buyers, foreclosure search engine RealtyTrac reported Thursday.
In fact, just 43 of 456 U.S. counties analyzed by RealtyTrac exceeded their normal historic affordability levels in the first quarter of 2016. In the same three months of 2015, 10 counties of the 456 exceeded normal affordability levels, the report said.
A decade ago, at the peak of the housing bubble in second quarter 2006, 454 of the 456 counties analyzed were less affordable than their historic norms. By first quarter 2012, when median home prices bottomed out nationwide, only two counties exceeded their normal levels.
Yet the current numbers don't mean everyone can readily go out and buy a house.
"Prices are floating out of reach for average wage earners in a growing number of U.S. housing markets," said Daren Blomquist, senior vice president at RealtyTrac.
In Philadelphia County, where the median sale price increased 20 percent year over year, wages grew only 3 percent in the same period, the data show.
Nationwide in first quarter 2016, the average wage earner needed to spend 30.2 percent of his or her monthly wages to make mortgage payments (including property taxes and insurance) on a median-priced home, RealtyTrac reported.
In Philadelphia County, with a median price of $120,000 - half the houses sold for more, half for less - the average earner would have to spend 15.2 percent of monthly income to make the needed payments, RealtyTrac said.
In Camden County, with $138,000 as the median price, 21.7 percent of monthly income would be required, the data show. In Chester County, with a $283,000 median price, 34.7 percent would be required.
The figures were as follows in the other counties, RealtyTrac said: Bucks, median price $252,572, 41.1 percent of monthly income required; Burlington, $165,000, 24.6 percent; Montgomery, $235,500, 26.6 percent; Gloucester, $167,000, 29.6 percent.
RealtyTrac said it did not have enough data for Delaware County to include it.
Those percentages are all lower than the historic norms, possibly reflecting home prices that have not recovered to normal levels, let alone what houses sold for during the boom years of the mid-2000s.
"Although there are some markets where home prices are back to or above those levels . . . because interest rates are so much lower now than they were during the last boom, the actual house payment including principal, interest, taxes, and insurance is lower than it would have been for a lower-priced house," he said.
In third quarter 2007, the median home price in Philadelphia County was $121,900, compared with $120,000 in the first part of 2016, but the interest rate was 6.38 percent then and is 3.66 percent now, Blomquist said.
The affordability equation could change quickly if interest rates trend higher and home prices continue to rise faster than wages, he said.
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