theMReport.com Your trusted source for mortgage banking news
The National Association of Realtors reports metros with declining affordability over the past five years have seen job growth fall during the same period.
Its new study examined 174 metros and analyzed shifts in affordability considering the pace of wage growth in Q3 2019 compared to Q4 2018.
The report found affordability declined in 81 metros areas—34 of them saw wages fall faster in Q3 2019 than the national average over the past five years.
Lawrence Yun, NAR Chief Economist, said increased housing inventory is needed to improve affordability.
“Job growth has slowed in these areas in part because limited supply is making homes less affordable,” he said. “As inventory continues to decline and affordability worsens, workers, businesses and companies are less incentivized to do business in these areas.”
Boise, Idaho, had the largest drop in affordability, falling from 108th in 2014 to 153rd in 2019. The average sales price in Boise grew 75% from $172,900 in 2014 to $303,100 in 2019—four times the growth rate in median income of 18%. Wages grew from $62,000 in 2014 to $73,1010 in 2019.
The metro of San Jose-Sunnyvale-Santa Clara, California, is the least affordable U.S. metro region, while California metros, Anaheim-Santa Ana-Irving; Los Angeles-Long Beach-Glendale; San Francisco-Oakland; and San Diego-Carlsbad remain at the bottom of the list.
The affordability ranking in Austin, Texas, improved due to it being already relatively unaffordable. Job creation slowed in Texas’ capital by -1.8%.
Yun said falling affordability and inventor could leave some of the nation’s previously fastest-growing metros unable to sustain job and economic growth.
“Even fast-growing markets could be hurt and unable to further expand because of weakening affordability conditions. We must improve affordability by building more homes in line with local job market growth,” Yun said.
Decatur, Illinois, was reported to be the most affordable metro in the nation in Q3 2019. Wages in Decatur grew just 0.16% from 2014-2018, but wages grew during Q3 2019 by 1.2%.
