Buying a Home Still Out of Reach for Many Key Workers
Despite historically low mortgage interest rates and steep drops in home prices, many key workers in the community — such as police officers, elementary school teachers, licensed practical nurses, retail salespeople and janitors — are still unable to afford purchasing a home, according to the latest “Paycheck to Paycheck: Wages and Cost of Housing in America” report from the Center for Housing Policy.
The study compared and ranked the costs of buying or renting a home in more than 200 U.S. metropolitan areas with salaries for over 600 occupations.
It found that the income needed to purchase a median-priced home dropped in 93% of the housing markets studied between 2008 and 2009. For the same period, the typical rent for a two-bedroom home rose in 89% of the markets studied, which may reflect a shift in demand from homeownership to rental housing from foreclosures and families waiting to see more stability in prices before they buy a home.
Low salaries prevented many traditional workers from taking advantage of the lower cost of buying a home, the report said, but tighter credit markets and stricter lending practices also made it more difficult for those who could afford a home to actually qualify for one.
The homeownership affordability findings for traditional community workers revealed that police officers could not afford to purchase the median-priced home in 86 of the 208 homeownership markets studied, as was the case for elementary school teachers in 83 of those markets, nurses in 146, janitors in 202 and salespeople in 207.
Low interest rates and falling home prices made homeownership newly affordable for police officers in 37 of previously unaffordable areas, for elementary school teachers in 33 and for licenses practical nurses in 26.
The markets with the highest median prices were: San Francisco; San Jose, Calif.; Honolulu; Santa Ana, Calif.; and Santa Cruz, Calif. The places with the steepest drops in income needed to purchase a median-priced home included: Atlantic City, N.J., and Ocala, Fort Lauderdale, Port St. Lucie and Cape Coral in Florida.
The study found that in the vast majority of metro markets, fair market rents have held steady or increased — occasionally surpassing monthly mortgage payments for a median-priced home.
Specifically, retail salespeople continued to be priced out of renting a two-bedroom apartment in every market studied. Janitors fared almost as badly, being able to afford a two-bedroom apartment in only one of the 210 rental markets studied. Licensed nurses were unable to afford a two-bedroom rental in 55 of the markets, police officers in 12 of them and elementary school teachers in 11.
Rents increased in 89% of the markets studied, with only 23 metro areas experiencing a decrease in rents. Places with the highest increases in rents over the one-year period studied included: Knoxville, Tenn.; Tucson, Ariz.; Charleston, S.C.; Bakersfield, Calif.; and Sarasota, Fla.
Rising rents and declining homeownership costs were particularly noteworthy in Florida. The income needed to afford homeownership dropped more than 20% in 12 markets in the state, while typical two-bedroom rents rose across all of the Florida markets studied, nearly 6% — twice the median rent increase found by the study overall. At the same time, wages for many community workers remained flat or decreased in numerous Florida markets.
The study also took a glimpse at housing affordability for workers in the emerging “green economy” who help make the nation’s homes and businesses more energy-efficient and help to produce clean and sustainable energy — including electrical engineering technicians, environmental engineering technicians, HVAC mechanics, maintenance and repair workers and insulation workers.
According to the study, certain green economy workers were better able to afford housing than workers in other lower-paying jobs. For example, electrical engineering technicians were able to purchase a median-priced home in 122 of the 208 homeownership markets studied and environmental engineering technicians and HVAC mechanics could do so in 118 of them.
Electrical engineering technicians were also able to rent a two-bedroom apartment in 198 of the 210 rental markets studied, as were environmental engineering technicians in 192 of them, HVAC mechanics in 195, maintenance and repair workers in 146 and insulation workers in 142.
However, the study also found many markets where green economy workers were unable to afford the costs of buying or renting a typical home.