Home ownership remains a pipe dream for many Americans with a third of wage earners unable to afford the lowest priced home, according to a report released Monday.
The online real estate company Zillow said home affordability among the least affluent third of Americans has worsened sharply nationwide over the past two years, as the housing market has recovered but incomes have not.
The bottom third of wage earners are effectively locked out of the market in major metropolitan areas of California, including Los Angeles, San Diego, San Francisco and Silicon Valley, where those in the bottom third would have to spend over 70 percent of their monthly income on a low-priced home. Only Sacramento is relatively affordable.
“The disparity has placed homeownership increasingly out of reach for working Americans whose wages are lowest, even if they shop for the least expensive homes on the market,” Zillow said. “Worsening housing affordability for the lowest earners comes as rental housing is less affordable than ever, forcing those who can’t afford to buy to face rapidly rising monthly rent payments.”
Here’s what percent of monthly income wage earners in the lowest third would have to pay for the least expensive home:
- San Jose (Silicon Valley) — 85.6 percent
- Los Angeles — 84.7 percent
- San Francisco — 72.0 percent
- San Diego — 70.1 percent
- Sacramento — 46.0 percent
- U.S. Average — 26.1 percent
“This is a striking example of growing income inequality in America, as upper-tier incomes grow sufficiently to keep even very expensive homes affordable for the well-heeled, while wages among the working class increasingly fail to support the purchase of even the most modest homes,” said Zillow Chief Economist Dr. Stan Humphries.
“At the same time, rising rents and stagnant wages are also making rental housing increasingly unaffordable. It is imperative that we find ways to create both meaningful wage growth for all workers, and increase the supply of affordable housing, and soon. If not, we run a real risk of the working class in America running out of affordable housing options, either to rent or to buy.”
Mayor Eric Garcetti addressed the issue at the Los Angeles Business Council Summit in 2014, announcing plans to add 100,000 new housing units in Los Angeles by 2021. Affordable housing measures are also being considered by Metro, in a proposal for a $10 million Countywide Transit Oriented Affordable Housing loan fund and goal for 35 percent affordable housing on Metro property.
[via timesofsandiego.com]
— Staff