Teles Properties Sign Spotted in Wall Street Journal Piece
While rising home prices are great news for sellers, some segments of the population get left in the lurch.
That from a Wall Street Journal piece about rising home prices around the nation. All metropolitan markets seem to be feeling the pinch, with the trend spreading inland from large coastal cities.
Reporter Laura Kusisto writes that “rising home prices are putting America’s largest metropolitan areas out of reach for teachers, police officers and other big slices of the U.S. workforce.”
Teachers in the Denver and Austin metro areas could afford just 13% of the homes for sale in those markets, according to a study released Wednesday by real-estate website Trulia. That is down from 20% and 16%, respectively, in 2014.
In all, teachers can afford less than 20% of the homes for sale in 11 of the 93 major U.S. metro areas studied.
The numbers underscore the challenges major metro regions face as home prices shoot beyond what workers in many industries can afford. It essentially leaves workers with a choice of leaving those areas or facing long commutes to work.
“People cannot afford to live where they serve their communities,” said Cheryl Young, a senior economist at Trulia.
The Trulia study defines affordability as a household spending 31% of its monthly income on housing, assuming a 20% down payment and a 30-year fixed rate mortgage at current interest rates. It looks at entire metro areas — not only at trendy downtowns but also at the surrounding suburbs, which long have offered more affordable housing options.
How does this tie back to California and the luxury real estate market?
In San Jose, Calif., two teachers could afford 35% of homes and two first responders could afford 58% of available listings.
Many lower-income workers in these areas are likely to rent rather than buy. The overall homeownership rate in the San Francisco metro area is 58%, according to U.S. Census data.
Read the entire piece here.