Houses may be cheaper — but still not affordable
May 29th, 2009By Sara Wolfson
A new study, released by the Center for Housing Policy, compares housing costs in over 200 U.S. metropolitan areas with the wages earned by workers in 60 occupations — and finds that often, workers in key professions are unable to afford buying a house even after the recent drop in housing prices. Some in expensive areas or low-earning professions can’t reasonably afford to rent, either. In certain places, such workers even include police officers, Licensed Practical Nurses, and elementary school teachers.
Here are the numbers from Lancaster, Pennsylvania, where I lived until recently. Perhaps because I grew up in New Jersey, I’d always thought of Lancaster as having cheap land and remarkably cheap houses. But according to the salaries that Lancaster workers receive, “cheap” doesn’t mean “affordable.” This graph focused on five types of constructive workers, since these are jobs likely to be created by the stimulus. None but the most highly paid — construction managers — can even begin to think of affording a home:
The numbers, bad as they are, are worse than they appear because the Center for Housing Policy’s definition of affordability is rent which does not exceed 30 percent of income. (Many families are spending well over 30% of their income to buy or rent a house.)
If you’ve been following this blog for a while, you probably know that affordability changes substantially when transportation enters the picture, as illustrated so eloquently by the Housing + Transportation Affordability Index powered by The Center for Neighborhood Technology, an SGA coalition member, and the Brookings Institution.
This tool takes into account that houses far away from jobs and businesses may be cheaper in outright costs but more expensive when the ‘hidden’ costs of transportation are factored in. Measuring both housing and transportation costs together turns large swathes of land unaffordable. And for the most part, prices are falling the most in exurban counties with fewer jobs and expensive commutes to job centers, shopping and other daily needs.
The headlines may be full of news about falling home prices, and what a disaster this is for the market, but the truth is that lower home prices are still not low enough for many American families to afford to buy or rent.
December 30th, 2009 at 2:51 pm
[...] New Biosphere Reserves, Energy Barn Raisings and Cloud Control World Changing – May 29, 2009 Houses May Be Cheaper, But Still Not Affordable Smart Growth Around America – May 29, 2009 Research Compares Transportation-Related [...]