Real Estate
Puget Sound Home Prices Skyrocketed In 2022: New Data
While it may not come as a surprise to prospective buyers, new data illustrates just how expensive home ownership is getting in Washington.
![The 2022 U.S. Home Affordability Report shows home buying costs have made ownership difficult across the country.](https://patch.com/img/cdn20/shutterstock/23562256/20220720/054214/styles/patch_image/public/shutterstock-1121990426___20174144885.jpg)
SEATTLE – After home prices spiked over the past year, people in Western Washington are finding it harder to buy a house than at any point in the last 15 years, according to a recently released home affordability report.
The 2022 U.S. Home Affordability Report showed potential home buyers face significant financial obstacles across the United States amid rising home prices and interest rates as well as straggling wage growth.
The report, released by real estate data company ATTOM, found median-priced single-family homes and condos were less affordable in the second quarter of this year compared to historical averages in 560 of 575 counties with data available. That’s more than 97 percent of all counties measured, up from 69 percent in the second quarter of last year.
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That's no surprise in Puget Sound, where the growth in home values outpaced most people's salaries last year. While realtors have noted signs of a calmer market emerging, asking prices for most properties remain sky high.
In King County, homes are 20 percent less affordable than last year, and 17 less affordable than last quarter based on a comparison of the average annual wages and the annual wages required for major home ownership expenses, according to ATTOM’s Affordability Index.
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King County scored 79 on the Affordability Index in the second quarter of 2022, compared to 99 in the second quarter of 2021 and 96 in the first quarter of 2022.
ATTOM’s calculations assumed a 20 percent down payment and that households would not be spending more than 28 percent of their income on mortgage payments, property taxes and insurance. An index below 100 indicates that housing is less affordable in that county compared to historical averages.
The share of counties that are historically less affordable is at its highest point since 2007, just before the Great Recession, according to the report.
The median national home price increased 16 percent last year, trending up for the 11th straight year. But average annual wages didn’t keep pace, increasing just 6 percent.
The median sales price among the 7,935 houses sold in King County in the second quarter of 2022 was $851,000, which represents a 13 percent increase over the median sales price a year ago.
The annual wage needed to afford monthly payments on a typical home is nearly $180,000, which is well north of the county's average annual wage, according to the U.S. Bureau of Labor Statistics. Under current market conditions, the average wage earner in King County would put 43.5 percent of their wages toward monthly house payments on a median-priced home. That’s well above the county’s historic high mark of 34.5 percent, according to the study.
In neighboring Pierce County, the median price for the 3,258 homes sold in the second quarter of this year was $550,000, 24 percent less affordable than the year before. The study found the average earner would have to put 55 percent of their wages toward monthly house payments — nearly 20 percent more than previous highs.
Additionally, 30-year mortgage rates nearly doubled from about 3 percent to about 6 percent, creating a significant obstacle for prospective homebuyers.
The median national home price reached an all-time high of $349,000, and the portion of average wages required to buy a house has risen to 31.5 percent — well above the recommended 28 percent. The portion of average wages needed for monthly home payments has risen at the fastest rate, measured from the first quarter of 2022 and over the past year, since at least 2000, according to the report.
Homes remained relatively affordable during the COVID-19 pandemic and over the last few years despite high prices due to historically low mortgage rates, said Rick Sharga, executive vice president of market intelligence at ATTOM.
But significantly rising mortgage rates have strained potential homebuyers, saddling them with monthly mortgage payments between 40 and 50 percent higher than they were even a year ago, Sharga said.
“Payments that many prospective buyers simply can’t afford,” Sharga said.
The counties with the lowest housing affordability indexes in the country in the second quarter of 2022, along with their scores are:
- Clayton County, Georgia (47)
- Canyon County, Idaho (48)
- Rankin County, Mississippi (48)
- Maury County, Tennessee (49)
- Pinal County, Arizona (49)
Harrison County, Mississippi, had the largest year-over-year decrease in its affordability index, which dropped 42 percent from 117 in the second quarter of 2021 to 68 in the latest report. Clayton County, Georgia, also fell 42 percent from 81 to 47.
Other key findings in the report include:
- 40 percent of the counties studied require at least an average annual salary of $75,000 to afford a typical home, according to the report.
- Home prices are up at least 10 percent over the past year in 65 percent of the counties in the report.
- Home price increases outpaced wage growth over the past year in over 90 percent of counties.
- Every county except two of those analyzed saw an increase in the portion of average wages that went toward typical housing expenses both quarterly and year-over-year.
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