IRVINE, Calif. (3/30/15)--Home-price appreciation has climbed 13 times faster than wage growth over the past two years in the United States, according to recent data from Irvine, Calif.-based RealtyTrac.
In fact, home prices have risen by 17% in the two years ending in December 2014, while median wages have only inched up 1.3% over that same stretch.
"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, RealtyTrac vice president. "Eventually, however, those traditional buyers will need to play a bigger role in the housing market for the recovery to maintain its momentum."
Home-price appreciation outpaced wage growth in 140 of 184 U.S. metros, according to the data.
Affordability still remains intact in many places, however, as out of the 184 markets analyzed, nearly three quarters had a median home sales price that required less than 28% of median income for monthly mortgage payments.
"Those markets with the biggest disconnect between price growth and wage growth during the last two years are most likely to see plateauing home prices in 2015 until wages catch up," Blomquist said. "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 in 2015 in most cases."
The metro areas that saw the highest rates of home-price appreciation compared with wage growth for the two years ending in the fourth quarter of 2014 were Sacramento, Calif., Riverside-San Bernardino, Calif., Las Vegas and Detroit.