“Congratulations, Seattle. You got a raise. The bad news is that during roughly the same time, your median home prices shot up three times more than your “big” salary boost.
RealtyTrac, a national company that examines housing data, on Thursday released an analysis of wage growth and home price appreciation over the last two years. Home price appreciation has outpaced wage growth in more than three-quarters of the nation’s housing markets, including the Seattle metro region.
While average weekly wages in Seattle increased 5.2 percent to $1,143, the median home price climbed nearly 17 percent to $309,750. This means that it takes almost 34 percent of the median income to buy a median priced house or condo, according to the analysis.
The rule of thumb is that you should not spend more than 30 percent of your income on shelter, though this has been called into question. A 2014 Bloomberg article called the 30 percent threshold “nearly useless.”
Home prices in Seattle, especially in the core areas near the city, are becoming increasingly less affordable, according to OB Jacobi, president of Windermere Real Estate in Seattle. He said that as long as buyer demand outpaces seller supply, it is unlikely Seattle will see any improvement in affordability in the foreseeable future.
In the greater Puget Sound region last month, the number of new residences on the market shot up 7.3 percent over February 2014. Yet pending sales increased more. The result is there are now 13.6 percent fewer houses and condos for sale, and that means higher prices. Median sales prices jumped 8.5 percent in Snohomish County, nearly 7 percent in Pierce County and 2.7 percent in King.
What’s occurring in Seattle is happening across the country. According to RealtyTrac, home price appreciation has outpaced wage growth in 76 percent of U.S. housing markets.
Among Seattleites, the increasing cost of housing seems unsustainable, but the situation here is not as bad as elsewhere. According to RealtyTrac, Seattle’s “price growth-wage variance” comes in at just over 11.6 percent. Detroit tops the list with a variance of more than 52 percent. Average wages in Detroit are up almost 5 percent, but median home prices have increased 57 percent.
Seattle’s wage growth ranked 34th nationally, according to RealtyTrac, which based this part of its analysis on U.S. Bureau of Labor Statistics data. Gulfport-Biloxi, Miss., where average weekly wages shot up 13.2 percent to $783 was No. 1 on the list. Coming in last was Bellingham, where average wages actually fell 1.3 percent to $768. Out of the 185 metros in the report, Bellingham was the only area where wages decreased.” –Marc Stiles for Puget Sound Business Journal