Press release from Construction Coverage:
Despite decades of record-setting home sales, owning a home has become increasingly difficult for the average worker. Mortgage interest rates are historically low, yet hourly earnings have failed to keep pace with rising housing costs. Data from the federal government indicates that although earnings for production and nonsupervisory workers increased by approximately 80 percent between January 2000 and April 2020, housing costs have nearly doubled during the same period.
The rise in home prices over the past several years has occurred during a period of increased housing demand—driven by a growing economy and more millennial homebuyers—as well as a shortage of new, single-family homes available for purchase. Data from the U.S. Census Bureau indicates that new home construction has still not rebounded to pre-Great Recession levels. Recent housing supply data indicates ongoing shortages, with a 7.9 percent decrease in new single-family homes for sale between January and June 2020. The long-term increased demand for housing paired with a concurrent diminishing supply has contributed to the nation’s housing affordability crisis.
At the same time that home prices have gone up, wages for the average worker have failed to keep pace. Research from the Economic Policy Institute shows that while wages for high-income workers grew steadily since the 1980s, middle- and low-income workers have actually seen their wages stagnate or even decline after adjusting for inflation.
At the state level, the largest gaps between home price and income growth are found in Western states such as Nevada, Idaho, Utah, Oregon, Washington, Colorado, and Arizona. Home prices in these states outpaced wage growth by more than 3X between 2014 and 2019. In Midwest and East Coast states, home prices grew more slowly relative to income. In only three states, North Dakota, Connecticut and West Virginia, did income growth actually outpace home price growth over the past five years.
To identify metropolitan areas with the greatest rise in home prices relative to income, researchers analyzed data from Zillow and the U.S. Bureau of Labor Statistics. For each metro, the percentage change in home price between 2014 and 2019 was divided by the percentage change in median wage during the same time period.
Consistent with state-level trends, the metros with the largest increases in home prices relative to income are concentrated in Western states. Northeastern metropolitan areas are notably absent from the list, indicating that incomes have better kept pace with home prices in those locations. Astonishingly, home prices have outpaced income in nearly 90 percent of U.S. metropolitan areas with at least 100,000 residents.
Here is a summary of the data for the Asheville, NC metro area:
- Increase in home prices relative to income: 2.3X
- 5-year percentage change in home prices: 37.2%
- 5-year percentage change in wages: 15.9%
- Median home price (2019): $273,027
- Median annual wage (2019): $35,070
For reference, here are the statistics for the entire United States:
- Increase in home prices relative to income: 2.6X
- 5-year percentage change in home prices: 30.7%
- 5-year percentage change in wages: 12.0%
- Median home price (2019): $242,058
- Median annual wage (2019): $39,810
For more information, a detailed methodology, and complete results, you can find the original report on Construction Coverage’s website: https://constructioncoverage.com/research/cities-where-housing-costs-have-risen-fastest-relative-to-income
Before you comment
The comments section is here to provide a platform for civil dialogue on the issues we face together as a local community. Xpress is committed to offering this platform for all voices, but when the tone of the discussion gets nasty or strays off topic, we believe many people choose not to participate. Xpress editors are determined to moderate comments to ensure a constructive interchange is maintained. All comments judged not to be in keeping with the spirit of civil discourse will be removed and repeat violators will be banned. See here for our terms of service. Thank you for being part of this effort to promote respectful discussion.