Home affordability may be
influencing population migration
Buying a home in third-quarter 2018 was the least affordable it’s been in 10 years, according to the latest
affordability report from Attom Data Solutions. There is evidence that this low affordability is beginning to take
a toll on the housing market.
U.S. existing-home sales slowed for four consecutive months ending in July 2018, and nationwide home-price
appreciation decelerated to the slowest pace in two years in second-quarter 2018. A deeper dive into the
report from Attom shows that affordability also is influencing population-migration patterns.
Attom appended 2017 net migration
data from the U. S. Census to the affordability data for the 440 U. S. counties analyzed in the report. Those counties were
divided into two groups: ones where
buying a median-priced home this past
third quarter required $100,000 or more
in annual income and ones where buying a median-priced home required less
than $100,000 in annual income.
There were 69 counties where buying a
median-priced home in this past third
quarter required more than $100,000
in annual income. The combined population of 66.2 million in those counties
accounted for 30 percent of the total
combined population in all 440 counties analyzed.
About two-thirds of the 69 low-affordability counties ( 45 in total) had domestic net-migration losses in 2017,
meaning during the year more people moved out of each of those counties to another U.S. county than moved
into the county from another U.S. county.
The leading five low-affordability counties with the biggest domestic net-migration losses in 2017 were all
located in large metro areas in California or New York. The significant population losses from out-migration
beg the question: How are these housing markets also continuing to post solid home-price appreciation?
The answer, at least in part, is strong international in-migration that is propping up demand for housing.
All five low-affordability counties with the biggest decreases in domestic net migration saw sizable increases
in international net migration in 2017 — meaning during the year more people moved into the county from
outside the country than the reverse.
In fact, all 69 of the counties where buying a median-priced home required $100,000 or more in annual income
posted increases in international net migration in 2017. Those international migrants are not as likely to be
constrained by affordability, helping push home prices further out of reach of locals, who are in turn increasingly
moving to more affordable markets.
There were 371 counties where buying a median-priced home in third-quarter 2018 required less than $100,000
in annual income. The combined population of 154.2 million in these counties accounted for 70 percent of the
total combined population of all 440 counties analyzed.
Opposite of the trend in the low-affordability counties, nearly two-thirds of the 371 more affordable counties
(a total of 238) had domestic net migration gains in 2017. Additionally, international net migration increased
in 2017 in all five of the counties with the biggest domestic net-migration gains — located in Arizona, Nevada,
Florida and Texas.
Domestic net-migration increases in the majority of more affordable counties supports the narrative that
population migration is being driven, at least in part, by home affordability. There are, however, exceptions that
show home affordability is certainly not the only driver of population migration.
Five large urban counties in Illinois, Texas, Michigan, Wisconsin and Pennsylvania all had third-quarter 2018
median home prices that required less than $100,000 in annual income. Still, all five markets posted sizable
domestic net-migration losses in 2017. Some combination of a weak job market and high taxes are likely behind
the domestic net-migration losses in most of these markets. The exception is Harris County/Houston, where last
year’s hurricane may have spurred outward migration. n
Daren Blomquist is senior vice president at Attom Data Solutions. With
Attom Data Solutions since 2001, he is
the company’s primary media spokes-person and an expert on the housing
market. Blomquist is executive editor
of the company’s award-winning
Housing News Report and creates
comprehensive real estate reports
cited by thousands of media outlets
and referenced by numerous entities,
from local real estate investment
clubs to multinational corporations,
universities and federal, state and local
government agencies. Reach him at
Source: Attom Data Solutions
Median home prices Percentage of average wages needed
to buy a median-priced home
Annualized average weekly wage
U.S. Home Price and Wage Trends