Extra
Even affordable housing increasingly out of reach
A policy group compares incomes and prices in 183 metro areas and finds teachers, firefighters and other public servants left behind. Realtors say market nearing peak.
By The Associated Press
Housing prices are far outstripping salary increases for low- and moderate-income jobs, putting the American dream of owning a home beyond the reach of teachers, firefighters and other community workers in many cities, said a study released Tuesday.
The report, by a coalition advocating affordable housing, found that even cities once considered affordable, such as Tulsa, Okla., are rapidly becoming too pricey for lower-income workers such as janitors and retail sales employees.
The study found the median price of a home in the United States rose 20% in just 18 months, to $225,000. During the same period, wages for teachers, firefighters and nurses in most cities remained flat or increased slightly, but still fell far short of the annual salary needed to buy a home, the report from the Center for Housing Policy said.
For example, the median household income for a nurse rose 10 % between 2003 and 2005, to about $36,000. For a firefighter, wages were flat, remaining at about $37,000 a year.
Those salaries don't come close to the $71,000 annual income needed to qualify to purchase a $225,000 home. The number is based on a down payment of 10%.
| The 50 least affordable cities | | Rank, City | Rank, City | Rank, City | | 1) San Francisco, CA | 18) Sacramento, CA | 35) Newburgh, NY | | 2) Orange County, CA | 19) Boston, MA | 36) Portland, ME | | 3) Santa Cruz, CA | 20) Barnstable, MA | 37) Worcester, MA | | 4) San Jose, CA | 21) Newark, NJ | 38) Providence, RI | | 5) Salinas, CA | 22) Washington, DC | 39) Bremerton, WA | | 6) Santa Barbara, CA | 23) Honolulu, HI | 40) Chicago, IL | | 7) Oakland, CA | 24) Riverside, CA | 41) Chico, CA | | 8) Santa Rosa, CA | 25) Modesto, CA | 42) Redding, CA | | 9) San Luis Obispo, CA | 26) Naples, FL | 43) Minneapolis-St. Paul, MN | | 10) San Diego, CA | 27) Merced, CA | 44) Miami, FL | | 11) Bergen, NJ | 28) Reno, NV | 45) Denver, CO | | 12) Nassau, NY | 29) Boulder, CO | 46) Fort Collins, CO | | 13) Los Angeles, CA | 30) Seattle, WA | 47) Sarasota, FL | | 14) New York, NY | 31) Yuba City, CA | 48) New London, CT | | 15) Vallejo, CA | 32) Las Vegas, NV | 49) Flagstaff, AZ | | 16) Middlesex, NJ | 33) Fresno, CA | 50) Fort Lauderdale, FL | | 17) Stockton, CA | 34) West Palm Beach, FL | |
|
Source: Center for Housing Policy
"It's not just the level of housing prices versus wages, but the fact that, especially in some areas, the housing prices are growing so much faster," said Barbara Lipman, the research director for the center.
"It's creating this dynamic where people who work these jobs must feel like they'll never catch up. The dream of home ownership may be unattainable," she said.
Even the affordable are less affordable
The study looked at incomes for more than 60 occupations, from janitors to accountants. It examined housing prices for nearly 200 metropolitan areas from the fourth quarter of 2003 to the first quarter of this year.
The least affordable places in the country were the usual suspects: San Francisco, Orange County, Calif., and Northeast cities such as New York and Boston.
| Gauging affordability: Prices vs. income | | Most affordable cities | Median-price home | Income needed | | 1) Lima, OH | $75,000 | $23,785 | | 2) Buffalo, NY | 85,000 | 26,956 | | 3) Waterloo, IA | 86,000 | 27,273 | | 4) Youngstown, OH | 86,000 | 27,273 | | 5) Saginaw, MI | 88,000 | 27,907 | | | | | Least affordable cities | Median-price home | Income needed | | 1) San Francisco, CA | $705,000 | $223,576 | | 2) Orange County, CA | 657,000 | 208,354 | | 3) Santa Cruz, CA | 625,000 | 198,206 | | 4) San Jose, CA | 585,000 | 185,521 | | 5) Salinas, CA | 545,000 | 172,836 |
|
Source: Center for Housing Policy
Some of the most affordable places were in the Midwest, places like Waterloo, Iowa, Saginaw, Mich., and Lima and Youngstown, Ohio.
But Lipman said cities like Tulsa and Minneapolis, which had traditionally been thought of as more affordable, are now a concern.
"We're seeing a problem in areas where you'd expect and then beyond that because of the flatness of the wage growth and the increased pressures on home prices and rents," said Lipman. "Even though we have historically low interest rates, that doesn't solve the problem."
More from MSN Money
The study identified West Palm Beach, Fla., as one of the areas where there's a growing disparity between housing costs and sluggish wages for low- and moderate-income families.
Further out of reach
The median home price in the Florida city has jumped nearly 32% since 2003, to $245,000. To qualify for a mortgage, a person would need to make about $77,600 a year, up from $57,600 in 2003. That would put a home out of reach for schoolteachers and police officers in the community, whose annual salaries are in the low to mid-40s.
The gap is even greater for nurses, who make about $36,000, and child care workers, whose salaries are in the low to mid-20s.
The Center for Housing Policy is the nonprofit research affiliate of the National Housing Conference, based in Washington.
Also Tuesday, the National Association of Realtors' chief economist, David Lereah, said the market "is probably close to a peak right now in terms of sales activity, but there is tremendous momentum. He said in the NAR's August forecast that sales are expected to coast at historically high levels into next year, but would trend slightly downward.
NAR President Al Mansell, of Salt Lake City, said housing shortages persist, which will propel the market to its strongest rate of price growth in 25 years. Its a great time to sell, but it may be a better time to buy about a year from now when the market should come closer to balance," Mansell said. He warned buyers to weigh postponing a purchase against the prospect of higher rates.
The national median existing-home price for all housing types is forecast to rise 10.5% in 2005 to $204,600, while the median new-home price should increase 5.2% to $232,400.
The 30-year fixed-rate mortgage is projected to rise slowly to 6.2% in the fourth quarter and 6.6% by the end of 2006.
|
