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Chicagoans Need Income Of $77,263 To Buy A Median-Priced Home

With U.S. home affordability dropping to the lowest level in a decade, the dream of homeownership appears to be slipping away from middle class America.

“Rising mortgage rates have pushed home prices to the least affordable level we’ve seen in 10 years, both nationally and at the local level,” said Daren Blomquist, senior vice president at ATTOM Data Solutions.

“Close to one-third of the U.S. population now lives in counties where buying a median-priced home requires at least $100,000 in annual income based on our analysis of 440 counties with a combined population of 220 million,” Blomquist said.

According to ATTOM Data Solutions U.S. Affordability Report, Chicagoans need an annual income of $77,263 to qualify for the purchase of the $235,000 median-priced home or condominium in the third quarter of 2018. However, national data shows Chicago actually is one of the most affordable housing markets in the Midwest.

In five California Bay Area counties, the following annual income is required to buy a median-priced home: San Mateo ($377,210), San Francisco ($366,582), Santa Clara ($327,284), Marin ($311,827), and Alameda ($237,760). The next most expensive counties nationwide were Westchester County, New York ($228,937) and Kings County (Brooklyn), New York ($221,993).

U.S. Census net migration data shows negative net migration in more than two-thirds of the nation’s highest-priced housing markets. Meanwhile, more than three-quarters of markets requiring annual income less than $100,000 to buy a home posted positive net migration. “This indicates that home affordability is at least one factor driving recent migration patterns,” Blomquist said.

In 2017, the net migration in the Cook County/Chicago area was minus 45,360 people, U.S. Census data shows.

Nationwide, the median home price of $250,000 in the third quarter of 2018 was up 6% from a year ago, twice the annual growth of 3% in average wages.

U.S. median home prices have increased 76% since bottoming out in the first quarter of 2012 while average weekly wages have increased only 17% over the same period. The average 30-year fixed mortgage rate is up 17% over the past year, reports the Freddie Mac Primary Mortgage Market Survey.

“As most purchasers budget based on monthly payments, the median buyer is now able to bid significantly less than before,” said Tendayi Kapfidze, chief economist at LendingTree, estimating that home buyers are able to borrow 10% less than a year ago because of the rise in interest rates.

The ATTOM Data report determined affordability for average wage earners by calculating the amount of income needed to make monthly house payments—including mortgage, property taxes and insurance—on a median-priced home with, assuming a 3% down payment and a 28% maximum “front-end” debt-to-income ratio.

According to a new housing forecast from Freddie Mac, prospective buyers are being squeezed the most where demand is the strongest: the entry-level portion of the market.

“Too many would-be buyers continue to be tripped up by not enough affordable supply and the one-two punch of much higher home prices and mortgage rates,” said Sam Khater, Freddie Mac chief economist. Here are highlights of the forecast:

• Mortgage rates inched backward over the summer, but have most recently started to trend higher again. Overall, the 30-year fixed-rate mortgage is expected to average 4.5 percent this year and 5.1 percent in 2019.

The rise in mortgage rates so far this year means a potential home buyer would pay about $35,000 more interest on a $220,000 loan over 30 years.

• Weakening affordability and not enough moderately-priced homes on the market continue to affect housing activity. Total home sales (new and existing) are now forecasted to decline modestly this year to 6.07 million, compared with 6.12 million in 2017. Home prices are expected to moderate, but still stay at a pace above inflation.

• The share of cash-out refinances last quarter was the highest since the third quarter of 2008 (78%). However, the total dollar volume of cash-out refinance activity remains much lower than the peak seen more than a decade ago.

An estimated $15.5 billion in net home equity was cashed out last quarter, which is substantially less than the peak cash-out refinance volume of $102.3 billion in the second quarter of 2006.

For more housing news, visit Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit

“The book is Escaping Condo Jail by Sara Benson and Don DeBat. I would say that anybody thinking about buying a condo, or even anybody serving on a condo board, or anybody who has any connection to a condo, this is must reading—all 600 and something pages. Thanks a lot for a great book!”


Steve Sanders, “Your Money Matters” WGN TV, December 22, 2014

By Don DeBat

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