For The Average American, Owning A Home Is Increasingly Unaffordable
By Tyler Durden
One month ago, in its traditionally cheerful assessment of the US housing market, the NAR’s Larry Yun snuck in an unexpected
That may not sound like much but it means that marginal “bubble” conditions of the type the NAR was warning about, have returned. It means that home buyers need to spend more of their incomes on housing, leaving less money for other purchases.
But where this home inflation is most evident is in the clear disconnect between home prices which are rising faster than wages in most of the United States, making homeownership increasingly difficult for average Americans.
The report found that home price growth exceeded wage growth in nearly two thirds of the nation’s housing markets so far this year, with urban centers like San Francisco and New York City among the least affordable.
This is what the RealtyTrac report found:
Annual change in median home prices in Q1 2016 outpaced annual change in average weekly wages in Q3 2015 (the most recent county-level wage data available from BLS) in 276 of the 456 counties analyzed for the report (61 percent).
The top five most-populated county housing markets where price growth outpaced wage growth were Los Angeles County, California (5 percent median home price growth and 3 percent average wage growth); Maricopa County, Arizona in the Phoenix metro area (8 percent median home price growth and 2 percent average wage growth); San Diego County, California (5 percent median home price growth and 4 percent average wage growth); and Orange County, California (5 percent median home price growth and 2 percent average wage growth).
Other markets where median home price growth outpaced average wage growth included counties in Miami, Brooklyn, Dallas, Seattle and Las Vegas.
“I’m sure it comes as no surprise to anyone in Seattle that it’s getting harder and harder to afford a home,” said Matthew Gardner, chief economist at Windermere Real Estate, covering the Seattle market. “Thanks in part to strong income growth and intense competition, home prices continue to escalate at rates that are negatively impacting affordability. Something else pushing up prices is the Washington State Growth Management Act, which continues to limit developable land and is holding back many builders from adding much-needed inventory to the market.”
More troubling is that at the national level, prevailing home prices have now risen faster than average wages for four consecutive years.
It is this troubling trend – which is leading to declining demand as well as even bubblier, debt-fueled conditions for the rest – that the NAR is worried about.
So is RealtyTrac: “While the vast majority of housing markets are still affordable by their own historic standards, home prices are floating out of reach for average wage earners in a growing number of U.S. housing markets,” said Daren Blomquist, senior vice president at RealtyTrac, which monitors housing market trends.
Well, …read more
Source: For The Average American, Owning A Home Is Increasingly Unaffordable
