Study Finds Montgomery County Housing More Affordable

County is bucking a national trend, analyst says


For sale signs in Chevy Chase.

Douglas Tallman

As interest rates slip and housing costs stay flat, Montgomery County home prices are becoming more affordable, according to a California company that compared third-quarter housing data against wage figures from the U.S. Bureau of Labor Statistics.

Attom Data Solutions of Irvine, California, created an affordability index based on the percentage of wages needed to make monthly house payments with a 30-year fixed rate mortgage and a 3 percent down payment.

Based on that index, housing in Montgomery County not only is affordable, it’s getting more so, according to the study.

In the third quarter of 2015, the county’s affordability index was 115 (under 100 is less affordable than the county’s historic average). In the third quarter of 2016, affordability had risen to 122, according to Attom’s data.

Over the past year, the county’s median home price—about $405,000—has been flat and interest rates have declined, which makes the Montgomery market more affordable than a year ago, said Daren Blomquist, senior vice president at Attom.

“It’s counter to the national trend, and counter-intuitive to the high home prices” in the county, Blomquist said.

ATTOM maintains a national property database that aggregates information including property taxes, mortgage andforeclosure data, and neighborhood characteristics and other property characteristic data for more than 150 million U.S. properties.

What Attom’s data show is that as prices rise in high-priced counties, and housing becomes less affordable, there comes a point where price appreciation slows down.

“It’s the free market working,” he said.

Bethesda real estate agent Jane Fairweather has seen the same thing.

Home prices in the county have eclipsed buyers’ incomes, which led them to ask whether they want to be house poor, or whether they can live without the biggest house on the largest lot, she said.

“There’s a whole trend toward smaller footprints, smaller lots, more simplified living,” she said.

In 2015, home prices escalated because of the huge demand. This year has been different, she said.

“It’s not a runaway, rambunctious market. It’s quieted down. We’ve seen a lot of price reductions before houses get sold,” Fairweather said.

The contentious national election is having an effect, too, she said. Even though a buyer might not be directly impacted by federal spending, the buyer probably is indirectly impacted, whether through employment or other circumstances. The change of administrations can cause buyers to hesitate to make home purchases, she said.

“If you’re worried about that, you’re probably not spending a lot of money,” she said.

Attom’s data found that 24 percent of county housing markets in the United States were less affordable than their historic affordability averages in the third quarter of 2016, up from 22 percent of markets in the previous quarter and up from 19 percent of markets a year ago. That percentage is at its highest share since the third quarter of 2009, when 47 percent of markets were less affordable than their historic affordability averages.

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