Credit: Shutterstock photoHomeownership more difficult
RealtyTrac is out with a report today saying that that home prices are rising faster than wages in nearly 2/3 of the nations housing markets so far this year. That is the bad news....
The not so bad news is they go on to say that home prices in 9% of the US housing market are now less affordable than there historic norms. That compares to 99% at the peak in 2006. They also add that prices are still far more affordable than during the peak in 2006. As a guide, the average homeowner needs to spend 1/3 of their income on their mortgage payment now. That compared to the average homeowner needed to spend more than 50% in 2006 (what were banks thinking?? See the Big Short movie for answers).
More bad news for highly sought after housing markets...the average wage earner are being squeezed out in places like NYC - especially Brooklyn and Manhattan - and in SF metro areas where the buyers need to spend 120% and 95% of the average wage on mortgage payments (how do they do that?).
Other areas where growth in home prices outstripped wage growth were LA, Phoenix and SD.
Earlier this week the Existing Home sales in the US fell by -7.1% to an annualized sales pace of 5.08M. The YoY median price saw prices rose by 4.4%, while the average sale price increased by 2.5% YoY.
So not quite the bubble of 2006 but some concerns.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
