Home > Mortgages > 10 Places Where Home Prices Are Outpacing Wages

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Home values significantly outpaced wage growth in the majority of markets analyzed in a new report from RealtyTrac, highlighting the difficulty many Americans face in trying to buy a home as the housing market recovers.

The report looks at average wage growth data gathered by the Bureau of Labor Statistics and median home sales price growth between the second quarter of 2012 and the second quarter of 2014 in 184 metropolitan statistical areas. Nationwide, median wages have increased 1.3% in two years, while median home sales prices have increased 17%.

A note on the use of median figures and average figures: Wage data available from the Bureau of Labor Statistics looked at average weekly wages by metropolitan area, but median wages were available on a national level, RealtyTrac told Credit.com.

“Despite the difference in calculating those numbers, looking at a 2-year trend as we did should provide a fair comparison of the two metrics’ trend over time,” said Daren Blomquist, vice president of RealtyTrac.

In the metro areas analyzed, average wage growth was 3.7% and median home price appreciation was 13.4%. Here’s where there are the largest discrepancies between wage growth and home price.

10. Washington, D.C. metro area
Two-year average wage growth: 1.5%
Two-year median sales price growth: 10.6%

9. Dallas metro area
Two-year average wage growth: 5%
Two-year median sales price growth: 20.1%

8. Chicago metro area
Two-year average wage growth: 3.1%
Two-year median sales price growth: 20.5%

7. Boston metro area
Two-year average wage growth: 4.6%
Two-year median sales price growth: 25.1%

6. Los Angeles metro area
Two-year average wage growth: 2.5%
Two-year median sales price growth: 28.4%

5. Miami metro area
Two-year average wage growth: 4.4%
Two-year median sales price growth: 32.3%

4. Houston metro area
Two-year average wage growth: 5.7%
Two-year median sales price growth: 36.9%

3. Atlanta metro area
Two-year average wage growth: 3.5%
Two-year median sales price growth: 38.1%

2. San Francisco metro area
Two-year average wage growth: 7.1%
Two-year median sales price growth: 38.6%

1. Detroit metro area
Two-year average wage growth: 4.9%
Two-year median sales price growth: 57.1%

RealtyTrac determined that most markets are still affordable, despite the greater increase in home prices than in wages. Of the metro areas analyzed, 73% had a median home price that would require a monthly mortgage payment, including property taxes and insurance, that would be 28% or less than the median income in that area.

Even if you live in an area where home prices are significantly outpacing wage growth, determining your personal affordability situation is crucial to deciding whether or not you can buy a home. You can use this home affordability calculator to help figure that out, but you also need to have an idea of whether or not you can qualify for an affordable mortgage, as well. Closely watch your credit if you’re considering buying a home, because consumers with excellent credit get access to the lowest mortgage rates. You can see a free credit report summary updated every 14 days on Credit.com.

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  • Gordon Smith

    re: not paying taxes…my 36 y/o son with bi-polar desease decided to file under a revised SSN for 3+ years. I met with IRS on his behalf and they really didn’t have any suggestions other than to pay up. Unfortunately, he cashed 50,000 of ira’s and did not realize the tax consequences of such! To make matters worse, he is unable to get SSDisabilty due to his tax obligations. Suggestions as to where can turn. He is one of the many bipolar folks who stops his meds when he thinks he is doing better! Then all hell breaks loose – a life of self destruction and chaos! Awful.

    • http://www.Credit.com/ Gerri Detweiler

      If the issue is now the tax bill that he owes the IRS then you’ll need to talk with an attorney who works with clients with tax bills they can’t pay. They can hopefully help him resolve the tax issue so he can proceed with his disability claim. So sorry to hear what all of you have been through.

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