The dream of affording a single-family home or condominium is becoming less reachable, a new study released Thursday found.
Homebuyers in Maine must be prepared to spend 29 to 48 percent of their annual wages, depending on the county where they live, to handle the mortgage and major expenses for a median-priced home, according to the study by ATTOM, a real estate data company. That’s compared with a national average of 30 percent of annual wages spent on home costs.
It’s the latest sign that home ownership is becoming more unaffordable due to ongoing high real estate prices, climbing mortgage rates and inflation.
Lenders generally like to see a maximum of 28 percent of wages go toward housing expenses when issuing a mortgage. That means homebuyers in the five Maine counties covered in the study — Androscoggin, Cumberland, Kennebec, Penobscot and York — on average would not qualify for mortgages.
Even though more homes are coming onto the market for sale, the supply in Maine remains limited, keeping prices high. The median sales price for a single-family home in Maine was $340,000 in August, up almost 10 percent from the previous year, according to the Maine Association of Realtors. At the same time, the number of homes sold was down almost 10 percent.
“Interest rates have essentially doubled. Many prospective homebuyers simply can’t afford the home they hoped to buy, and in many cases no longer qualify for the mortgage they’d need,” Rick Sharga, executive vice president of ATTOM, said.
The study analyzed publicly recorded sales deed and wage data in 581 U.S. counties during the third quarter of 2022. It assumed a 20 percent down payment, 28 percent debt-to-income percentage and covered counties with a population of at least 100,000 and at least 50 single-family home and condo sales in the third quarter.
With house prices outpacing salary raises, buyers in Kennebec and York counties would have to spend the highest percentage of their income to purchase a home. They would have to pay 48 percent of their income to afford a home in York County, where the median sales price was $435,591 in the third quarter with an average income of $93,462. Kennebec followed at 44 percent.
Penobscot had the lowest rate at 28.8 percent.
The ATTOM report said that only seven of the 581 U.S. counties included in the report, or 1 percent, were more affordable in the third quarter of this year compared with historic averages, down from 31 percent last year. New York County, which includes Manhattan, was among them.
“Homeownership remains largely unaffordable for the majority of homebuyers in the majority of markets across the country,” Sharga said.