Despite low interest rates and home price drops across the country, many key community and "green economy" workers still cannot afford to purchase a home, according to a recent study by the Center for Housing Policy, the research affiliate of the nonprofit and nonpartisan National Housing Conference.
"Paycheck to Paycheck: Wages and the Cost of Housing in America" looked at the wages for more than 60 occupations in more than 200 metropolitan areas and compared them with local home prices and rents.
Between 2008 and 2009, the income needed to purchase a median-priced home fell in 93 percent of the markets studied, while the income needed fell a median of 9.1 percent, the study said.
Even so, the study looked at two groups for whom housing remains unaffordable to some extent: green economy workers, including electrical or environmental engineering technicians, heating and air-conditioning mechanics, maintenance and repair workers and insulation workers, among others; and traditional community workers, including police officers, elementary school teachers, janitors, retail salespeople, and licensed practical nurses, among others.
Green economy workers were better able to afford a home than traditional community workers, "confirming the general benefits of restructuring the economy to create more green jobs," the center said.
Electrical engineering technicians, with incomes in the mid $40,000s to high $50,000s, could purchase a median-priced home in 122 of the 208 metro areas studied, while environmental engineering technicians and HVAC mechanics, with incomes in the low $40,000s to low $50,000s could afford such a purchase in 118, the center said.
Green economy workers were also able to afford to rent a two-bedroom apartment in at least 142 (for insulation workers) of 210 rental markets examined, even though the typical rent for a two-bedroom home increased 89 percent between 2008 and 2009, the center said.
The latter figure reflects increased demand for rental housing as people lose their homes to foreclosure or postpone purchasing a home until the market stabilizes, the center said.
At the same time, however, maintenance and repair workers with salaries in the high $30,000s and low $40,000s could not afford to buy a home in 159 out of 208 markets, and insulation workers with similar incomes could not afford to buy in 163 markets.
Even the higher-paid engineering technicians and mechanics couldn’t afford to buy a home in at least 86 of the markets studied.
"While the green economy holds substantial promise as a source of higher-paying jobs, there are still many housing markets in which green economy workers cannot afford the costs of buying or renting a home," said John K. McIlwain, Center for Housing Policy chairman, in a statement.
"We must develop the common sense, cost-effective policy solutions at the state and local levels that will help ensure long-term affordability for green economy workers and others. Otherwise, our workforce will face longer commutes and higher transportation costs, leading to increased traffic congestion and adverse environmental impacts."
The wage data for the study came from Salary.com, a private salary information provider, and the home price data came from the National Association of Home Builders and the National Association of Realtors. The rent information came from the U.S. Department of Housing and Urban Development’s Fair Market Rents.
The center also revised and updated the study’s online database so that anyone can search and compare wage and housing cost data by metro area and/or occupation.
The study assumes a 10 percent downpayment and that mortgage payments, property taxes, and insurance make up no more than 28 percent of household income.
For community workers, the affordability picture was even worse than for "green" workers. Retail salespeople, with incomes in the low $20,000s, were priced out of a home in 207 out of 208 markets, and janitors in 202.
Licensed practical nurses, with salaries in the high $30,000s to mid $40,000s, could not afford a home in 146 markets. Elementary school teachers, with incomes in the high $40,000s to mid $50,000s, could not afford a home in 83 markets, and police officers, with salaries in the high $40,000s to mid $50,000s, could not afford one in 86 markets.
During the time period studied, falling interest rates and home prices meant police officers, elementary school teachers and licensed practical nurses were able to afford a home in an additional 37, 33, and 26 metro areas, respectively.
While affordability was somewhat better in rental markets — licensed practical nurses, police officers, and elementary school teachers could afford to rent in 155, 198, and 199 markets, respectively — retail salespeople could not afford to rent a two-bedroom apartment in every single market studied and janitors could only afford to rent in one market out of 210.
Fair-market rents for a two-bedroom apartment are higher than a monthly mortgage payment in 24 out of 208 metro areas, the center said.
"Despite ownership costing less on a monthly basis in these markets, workers may need to keep renting due to a lack of access to credit or insufficient savings for a downpayment. Others may choose to rent given the uncertainty in the labor market and still-falling home values," the center said in its executive summary of the Paycheck to Paycheck study.
The Atlantic City, N.J., metro area had the the largest decrease in qualifying income needed to purchase a home. Qualifying income there fell 35.8 percent to $47,164 for a median-priced home of $158,000 in 2009, from $73,429 for a median-priced $226,000 home in 2008.
The next largest decreases were found mainly in Florida: Cape Coral, Fla. (-33.6 percent); Port St. Lucie, Fla. (-32.2 percent); Fort Lauderdale, Fla. (-31.9 percent); Ocala, Fla. (-30.7 percent), and Las Vegas (-29.3 percent).
Cities that saw the largest increases in qualifying income needed to purchase a home were Tallahassee, Fla. (17.8 percent); Saginaw, Mich.(9.5 percent); Santa Barbara, Calif. (9.2 percent); Scranton, Pa. (5.9 percent); and San Jose, Calif. (4.2 percent). The Center for Housing Policy’s Homeownership Market Rankings show rankings for other metro areas.
Of the metro areas studied, the top five most expensive rental markets were San Francisco; Honolulu; Santa Cruz, Calif.; Santa Ana, Calif.; and Suffolk-Nassau, N.Y. — unchanged from 2008.
The least expensive rental markets were Wheeling, W.Va.; Youngstown, Ohio; El Paso, Texas; Brownsville, Texas; and Lima, Ohio. See the center’s complete list of most to least expensive rental markets for further rankings information.
The most expensive homeownership markets were San Francisco; San Jose; Honolulu; Santa Ana, Calif.; and Santa Cruz. New York City fell from its No. 2 spot in 2008 to the No. 6 spot in 2009, followed by Suffolk-Nassau, N.Y.
The least expensive homeownership markets were Wheeling; Battle Creek, Mich.; Youngstown; Springfield, Ohio; and Bay City, Mich. See the center’s complete list of most to least expensive homeownership markets for more.
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