Housing prices may have plummeted, but they’re still not affordable for many working men and women in America.
The National Housing Conference Thursday released its annual “Paycheck to Paycheck” report, which compares workers salaries and home prices in more than 200 communities across the country.
The bursting of the real estate bubble has made owning a home more affordable for some, with the median price of a home dropping 14.5 percent nationally in the past year, the report concluded. But the majority of essential workers like teachers, police, and firefighters still cannot afford to buy a home in the towns and cities where they work, it added.
The “Paycheck to Paycheck” report takes an in-depth look at construction-related jobs, which are expected to get a boost from the Obama administration’s stimulus package. It analyzed five jobs: construction managers, carpenters, equipment operators, long-haul truck drivers, and construction laborers. It concluded that only construction managers, who make about $100,000 a year, can afford to buy a home in the 208 housing markets analyzed.
Carpenters were able to afford to own a home in 51 of the 208 studied markets, and equipment operators in 35 markets. Construction laborers were priced out of 196 of the communities.
“Just because prices are falling, that doesn’t mean that we have seen an end to the problem of affordability, because for many people, particularly at the low end of the income spectrum, people are losing their jobs or their hours are being cut back,” says Nicolas Retsinas, director of Harvard’s Joint Center on Housing Studies.
“So it’s not just the cost of housing, whether to purchase or rent, but it is also people’s ability to pay," he adds. "And in this economic situation we’re in, that’s becoming much more problematic.”
San Francisco remains the most expensive city in which to buy a home, with a median price of $575,000, according to the report. That’s down from $770,000 a year ago. New York ranks second with a median price of $455,000, a drop of $70,000 from a year ago. The least expensive places are Saginaw, Mich., and Youngstown, Ohio, each with a median home price of $73,000.
That price is affordable for most working Americans. But there's a catch. "The problem in a lot of these more-affordable areas is that unemployment is a substantial problem, so being able to actually purchase a home still may not be in everyone’s cards,” says Maya Brennan, a researcher at the Center for Housing Policy, the research arm of the National Housing Conference.
The report also found that rents rose nationally by 3.7 percent in the past year. But in Florida, which has been hit hard by the foreclosure crisis, rents spiked more significantly.
“One hypothesis is that as people are losing their homes, they become renters. And in the past renters could easily become homeowners, but now that door is shut to many,” says Professor Retsinas. “So in some markets, you see an increase in demand for rental housing, and an increase in demand for anything has a tendency to raise prices.”
The data have prompted calls for federal, state, and local officials to create more affordable housing, particularly in high-priced urban areas. The Department of Housing and Urban Development already has a Neighborhood Stabilization Program, which is designed to rehabilitate abandoned foreclosed homes, a certain amount of which must be affordable. But housing experts say that much more needs to be done.
“Although home prices have dropped, states and localities and the nation as a whole still have to pay attention to the needs of low- and moderate-income workers,” says Ms. Brennan. “A lot of communities can take advantage of the lower home prices to try to buy some properties themselves and get them preserved as affordable housing for the future.”
Some housing policy experts like Retinas see the housing market crisis as an opportunity.
“There’s an irony that in the midst of this calamity in the housing market, there’s a reaffirmation of the adage that housing really matters,” he says. “It was very difficult in years gone by to put affordable housing on the agenda, because people considered it an afterthought. Now have learned full well what happens when people lose their homes and are unable to afford a place to live.”