Some of the most active housing markets in the country have the biggest disparity between median incomes and the required salary to afford a home there, according to Builder magazine.
In nearly half of the 27 cities reviewed by Builder, median incomes were lower than those required to purchase a median-priced home there. In San Francisco, Los Angeles, New York and Seattle, among others, the difference was greater than 10%.
- Meanwhile, in cities like Cleveland, Pittsburgh, Baltimore and Washington, DC, area median incomes were higher than the salary required to purchase a median-priced home there.
Builder’s study goes some way to dispel concerns mounting over the affordability of homes in urban centers as income growth fails to keep pace with elevated home prices. Still, the study highlights a growing gap in populous, job-growth centers like San Francisco and New York where a shortage of affordable inventory is making it difficult for many renters and buyers alike to gain a foothold in the market.
The increase in home prices, largely driven by supply shortages, is showing no sign of abating in the near-term, with CoreLogic forecasting earlier this month home prices to rise 5.2% from September 2016 to September 2017.
The affordability crisis engulfing many metros is forcing officials to introduce proposals aimed at bridging the supply gap. Voters in Portland, OR, recently approved a $258.4 million bond that will fund construction of at least 1,300 affordable housing units as the city faces a shortage of more than 23,000 affordable housing units. Meanwhile, San Francisco is rolling out requirements for builders of the city's residential developments to include 25% affordable units, up from 12% previously.
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