It bothers me every day that the cost of going to college has increased eight-fold from when I went to school – that’s right 800% – yet work-study wages have only doubled from the time I mopped floors and loaded dishwashers. What does that say about affordability in general? And particularly, one’s ability to pay for housing.
With the March jobs report showing a considerable pullback in job growth compared to January and February, its effect on the already slow economic recovery is having far-reaching implications. Coupled with rising mortgage rates, inflation and home prices, “affordability” is becoming a scarce term especially when it comes to the housing market.
First Responders Find It Unaffordable To Live Where They Work
As a Trulia study noted, affordability is defined as a household spending no more than 31% of its monthly income on housing, assuming a down payment of 20% and a 30-year fixed-rate mortgage at current interest rates. The study pointed out that in America’s largest metropolitan areas, the cost-of-living has far exceeded what many workers in those cities can afford. No kidding. This is particularly problematic for first responders who must report to work on short notice, such as police officers and firefighters, where less than 20% in half-a-dozen major U.S. metropolitan areas can afford a home in their respective city of work. In San Francisco and San Jose, California, first responders could not afford over 90% of homes in those cities. This is a problem that is not going away.
Related Scraps Major Condo Project in Miami
Closer to home, the recently scrapped 298-unit Auberge luxury condo project by Related Group, located in Miami’s Arts & Entertainment District, gave us blatant evidence that a slow-down in the housing market is taking form. Related Group, South Florida’s largest condo developer, admitted that “taking a breather” was the best course to adjust to the slowing luxury condo market. Indeed, sales prices in downtown Miami have even slid 1.2% since 2014.
When it comes to wages, ATTOM Data Solutions released figures showing that since 2012, 96% of counties analyzed in their report have seen home prices rise at a faster pace than wages. An earlier report showed that U.S. Home Affordability has dropped an 8-year low citing the same combination of fast home price appreciation and slower wage growth.
I say hold on to your hats as we start on a new turbulent roller coaster ride that has downward trajectory.
From the trenches,