Home prices could be reaching a breaking point, new report says, as housing affordability drops to lowest level since 2007. The median price of homes and condos is a record $351,250.

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Homes are the least affordable they’ve been since just before the Great Financial Crisis, according to a new report that accounts for local wages and typical housing costs.

The typical homebuyer now spends 35 percent of their wages on housing expenses, above what is considered affordable and the highest level since 2007, according to a report released Thursday by Attom.

With home prices staying stubbornly high, Attom CEO Rob Barber said the nation could be approaching a point where prices have to drop.

“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,” Barber said. “We clearly aren’t there yet … but with basic homeownership now soaking up more than a third of average pay, the stage is set for some potential buyers to be priced out.”

Barber said the more potential buyers get priced out of the market, the less pressure there will be on demand that’s keeping prices at all-time highs.

The median price of a home and condo reached a new record of $351,250, Attom said. For that price to be considered affordable, a buyer needs an annual wage of at least $88,004 to pay for the record $2,053 typical monthly payment. Homes are considered affordable if a buyer spends no more than 28 percent of their wages on the mortgage, interest and property taxes.

Home prices are growing faster than wages in about half of the counties Attom looked at, which included counties with a population of at least 100,000 and at least 50 home sales in the quarter.

When comparing typical monthly housing costs, median home prices are less affordable than historical levels in 99 percent of the 578 counties Attom analyzed, more than double compared to two years ago.

“Meanwhile, major homeownership expenses on typical homes are considered unaffordable to average local wage earners during the third quarter of 2023 in 457, or more than three-quarters, of the 578 counties in the report,” Attom said.

Los Angeles, Chicago, Phoenix and San Diego were among the most populous markets that are unaffordable when comparing local wages and the typical homeownership costs of mortgage, interest and property taxes, Attom said.

Houston, Detroit, Philadelphia, Cleveland and Pittsburgh are among the most populous markets where housing is still considered affordable.

Email Taylor Anderson

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