The home price appreciation of the US housing markets has outpaced the wage growth in over three-quarters, according to a new study.
The study was conducted by data firm RealtyTrac and the findings were released on March 26.
The home price appreciation in the US exceeded wage growth from 2012 to 2014 by a ratio of 13-to-1. The home prices increased 17 percent and the median wages added 1.3 percent in this time.
Declaring the study’s findings, RealtyTrac vice president Daren Blomquist said, “Home prices in several housing markets countrywide found a floor in 2012 and since then have rapidly appreciated, mainly in markets that are attracting institutional investors, international buyers or some other flavor of cash buyer not constrained by income as much as traditional buyers.”
The home prices grew far more rapidly than wages in some parts of the country.
The highest ratio of home price appreciation to wage growth was reported by Merced, California, at 141-to-1.
It was followed by Memphis, Tenn. (99-to-1), Santa Cruz, Calif. (94-to-1) and Augusta, Ga. (78-to-1).
44 of the studied 184 metropolitan areas had greater wage growth than the home price appreciation. These cities include New Haven, New York, Conn., and Raleigh, N.C.
The study found that 73 percent of housing markets had a median price of home sales that required less than 28 percent of median income for the monthly mortgage payments, which made them affordable as far traditional standards is concerned. Seattle, Los Angeles and Boston had traditionally unaffordable housing markets.
“The markets where wage growth has outpaced home price appreciation during the last two years are poised to see at least steady growth in the prices of home for 2015 in most cases,” Blomquist said.
The RealtyTrac study analyzed data of two years after the second quarter of 2012 when the prices of home bottomed out.