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Local markets provide a silver lining in US housing market’s eroding affordability

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Photo: Mike Sinko/Flickr

Even as national home affordability slid to a 10-year low at the year’s end, many markets saw price appreciation slow down to be more in line with local wage growth, according to a new report from ATTOM Data Solutions, curator of the country’s largest property database.

“We saw slowing home price appreciation in nearly half of all local markets in our Q3 2018 home sales report, and expect that to continue into 2019, which will push more markets into the category of wage growth outpacing home price growth,” Daren Blomquist, ATTOM senior vice president, tells Livabl.

At the national level, ATTOM’s home affordability index fell to a reading of 91 in the fourth quarter of 2018 — the lowest level since the third quarter of 2008 when the index was 87. The index was at 94 in the previous quarter, and read 106 at this time last year.

ATTOM calculates its affordability index based on the percentage of income needed to buy a median-priced home relative to historic averages. A reading above 100 indicates that median home prices are more affordable than the historic average, and an index below 100 indicates that median home prices are less affordable than the historic average.

Among the 469 counties analyzed, some 76 percent posted an affordability index below 100 in the fourth quarter of 2018, indicating that homes were less affordable than the long-term affordability averages for the county.

This was down from a 10-year high of 78 percent of counties posting an affordability index below 100 in the the previous quarter.

But bucking the national trend, affordability improved from the previous quarter in 58 percent of the counties analyzed, including Cook County (Chicago), Harris County (Houston), San Diego County, and Miami-Dade County, Florida.

“These markets are leading the trend that I believe other markets will fall in line with next year,” says Blomquist.

In the markets where affordability has improved, ATTOM reports either a significant slowdown  in the rate of home price appreciation or stronger wage growth..

As the year ends, the national median home sales price is $241,250, up 9 percent from a year ago. And the national median salary has grown to $56,381, up 3 percent from a year ago at this time.

While annual home price appreciation outpaced annual average wage growth in most markets in the fourth quarter of 2018, annual average wage growth outpaced annual home price appreciation in 22 percent of markets.

These included some of the country’s hottest markets — Brooklyn and Manhattan (New York City), Seattle, WA, and San Jose, CA.

Nationwide, buying a median-priced home would require 35 percent of an average wage earner’s income at the end of the fourth quarter of 2018, slightly above the historical average of 32 percent.

The counties that had the highest share of wages needed to buy a median-priced home included Kings County (Brooklyn), NY (128.8 percent) and Marin County (San Francisco), CA (124.1 percent).

Looking ahead, Blomquist thinks 2019 will be one of the best years to buy in quite some time.

“There should be more inventory to pick from and fewer multiple offer situations, giving buyers a better chance of actually landing a home at a price they can afford,” says Blomquist.

And rising interest rates should chill the market somewhat, easing competition.

“Rising rates will continue to put downward pressure on demand, both in terms of actual affordability constraints and in terms of the impact it will have on the psychology of buyers and sellers,” says Blomquist.

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New home? Prepare for the unexpected

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(NC) Buying a house, getting married or having your first baby are all major life events that are likely to affect your finances. But whether you’re in the midst of a major life event or not, it’s important to check in on your finances regularly to maintain good financial health.

Your financial health encompasses things like your spending, savings, borrowing and future financial plans. It also means dedicating a set amount of savings for unexpected future events. It can even include optional credit protection insurance, such as TD protection plans, to help cover your debt balances in case of death, a covered critical illness or total disability.

Even though it can be tough to think about the unexpected, life is unpredictable and it’s important to plan for the unexpected. Find more information at td.com.

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Mortgage pitfalls to avoid

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(NC) Throughout life, you may have moments where you’ll make a large purchase or invest in a costly item, like your family home. But whether you’re in the market for your first new property or already have a mortgage, leaving this asset unprotected can be costly.   

Insuring your housing financial debt, as well as debt for other big-ticket items like a new boat for your lakefront cottage or keepsake jewelry like an engagement ring, is a smart investment in your well-being.

To help protect your debt balances like a mortgage, your bank may have optional credit protection insurance products.

“Your home is one of your biggest assets, yet illness can happen at any stage of life. Worrying about your mortgage when the focus should be on health isn’t a situation anyone would wish for,” explains Shirley Malloy, vice president at TD. “Fortunately, we offer mortgage protection to provide coverage for your outstanding balance should you face a covered critical health event.”

Mortgage protection can be purchased whether you’re in the process of applying for a mortgage or already have a home financing solution. But what about protection options for credit card debt?

“Given the unprecedented circumstances of this year, many Canadians are trying to plan for the unexpected to protect themselves and their finances,” says Malloy. “TD balance protection plus is an optional product designed to help you deal with your credit card payment obligations in the event of a covered event, such as loss of employment.”

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Is your internet too slow? It’s probably not you

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(NC) We all know the aggravation of a school lesson that just won’t stop freezing or the family video call that looks more like a photo montage. And, as we adjust to the impact of COVID-19 on our day-to-day, that slow connection can have frustrating consequences.

Working from home and learning remotely, both need fast, stable internet, something not enough Canadians have yet. Even if you have fast devices in your home, if the infrastructure in your area is not optimal, your connection won’t be either.

Right now, cities have the infrastructure needed to ensure access. But rural and remote communities are hugely underserved, with fewer than half having high-speed internet, and fewer than a third of households on reservations have high-speed connections.

Fortunately, change is coming. The Universal Broadband Fund is backing projects across Canada right now to ensure the reliable, high-speed internet connections families need to work, study, access services online, and safely stay in touch with each other.

The fund existed before COVID, but as a response to the pandemic, its timetable has been moved up by four years to a target of 98 per cent of Canadians with high-speed internet access by 2026. With the faster pace, at least 90 per cent of us should be connected by the end of 2021.

The fund is focused on improvements in rural and remote communities across Canada to fix the disconnect between internet access for urban and rural households.  This means more remote work opportunities, better access to remote learning and safer access to healthcare, no matter where you live.

It’s not just for good connections at home, either. The improvements mean much better access to mobile networks on highways between remote communities. The result is better, safer navigation and access to emergency services for your family, even on the road in the middle of nowhere. Mobile projects will be focused on serving Indigenous communities and the roads leading to them.

The shape these improvements will take in your area will depend on where you live. Canada is huge, and its communities are hugely diverse, with diverse needs. Keep an eye out for local projects — they’re a small part of something much bigger.

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