Home price appreciation has outpaced wage growth in more than three-quarters of U.S. housing markets, according to the results of a study released March 26 by data firm RealtyTrac.
Between 2012 and 2014, home price appreciation exceeded wage growth by a ratio of 13-to-1. In this time, home prices rose 17% while median wages only gained 1.3%.
"Home prices in many housing markets across the country found a floor in 2012 and since then have rapidly appreciated, particularly in markets attracting institutional investors, international buyers or some other flavor of cash buyer not constrained by income as much as traditional buyers," said Daren Blomquist, vice president at RealtyTrac, in a news release announcing the study's findings.
In some parts of the country, home prices grew far more rapidly than wages. Merced, Calif., had the highest ratio of home price appreciation to wage growth at 141-to-1. Memphis, Tenn. (99-to-1), Santa Cruz, Calif. (94-to-1), and Augusta, Ga. (78-to-1), followed.
Of the 184 metropolitan areas studied, only 44 experienced greater wage growth than home price appreciation. These cities include New York, New Haven, Conn., and Raleigh, N.C.
On a more positive note, RealtyTrac's investigation found than 73% of housing markets had a median home sales price that required less than 28% of median income for monthly mortgage payments, making them affordable by traditional standards. Areas that had traditionally unaffordable housing markets included Los Angeles, Seattle and Boston.
Blomquist noted in the report that markets with the largest gap in home price appreciation and wage growth could see home prices plateau in 2015.
"Meanwhile, markets where wage growth has outpaced home price appreciation during the last two years are poised to see at least steady growth in home prices 2015 in most cases," he added.
The RealtyTrac study chose to analyze the two years of data following the second quarter of 2012 when home prices bottomed out. It used Bureau of Labor Statistics data on average weekly wages and sales deed data in its analysis.
