Mortgage Rates Push Loudoun Homes Out Of Reach: Report

LOUDOUN COUNTY, VA — It’s becoming more financially difficult for the average worker in Loudoun County to buy a single-family home or condo, according to a new report looking at third quarter homeownership affordability.

The Home Affordability Report from ATTOM, a leading curator of real estate data, shows median-priced, single-family homes and condos were less affordable in the third quarter compared to historical averages in 99 percent of counties around the country that had enough data to analyze.

Overall, the report shows that affordability has worsened across the country amid a series of Federal Reserve interest rate hikes that have increased mortgage costs to their highest level in 21 years, ATTOM said. The latest data suggests a continuation of a two-year pattern of home ownership getting more and more difficult for average U.S. wage earners.

Loudoun County has an affordability index of 75. The index is based on the percentage of average wages needed to pay for major expenses on a median-priced home with a 30-year fixed-rate mortgage and a 20 percent down payment. Indexes lower than 100 are considered less affordable compared to historic averages under ATTOM’s methodology.

The Q3 median cost of a single-family home is $677,797 in Loudoun County. To afford that, average wage earners would have to make at least $79.846 and be positioned to spend 58.7 percent of their annual pay on their mortgages.

The report also shows a 3.3 percent year-over-year increase in median home sale prices in Loudoun County.

Combined, high interest rates and high sales prices have pushed major homeownership expenses up 35 percent, requiring a 28 percent debt-to-income ratio. It marks the highest level since 2007 and is well above the 21 percent figure from early in 2021, right before home-mortgage rates began shooting up from historic lows, according to ATTOM.

Nationally, the median cost of a single-family home or condo is up 2 percent from the second quarter, to a new record of $351,250 as an extended, 11-year housing boom continues. Home prices are rising faster than wages, resulting in declining affordability.

“The dynamics influencing the U.S. housing market appear to continuously work against everyday Americans, potentially to the point where they could start to have a significant impact on home prices,” ATTOM chief executive Rob Barber said in a statement.

“With basic homeownership soaking up more than a third of average pay, the stage is set for some buyers to be priced out which would reduce demand and the upward pressure on prices,” he said. “We will see how this shakes out as the peak 2023 buying season winds down.”

There are still places in the nation where single-family homes are still affordable relative to wages, including Harris County (Houston), Texas, Wayne County (Detroit), Michigan; Philadelphia County, Pennsylvania: Cuyahoga County (Cleveland), Ohio; and Allegheny County (Pittsburgh), Pennsylvania.