Short List

Wage Pressure

Home price appreciation outpaced wage growth in the U.S. by a ratio of 13 to 1 from 2012–2014, according to a RealtyTrac study. Home prices grew faster than wages in 76 percent of U.S. housing markets, the study finds.

After home prices hit bottom in 2012, prices have recovered relatively quickly, especially in markets that are attractive to investors, says Daren Blomquist, vice president at RealtyTrac. “Eventually, however … traditional buyers will need to play a bigger role in the housing market for the recovery to maintain its momentum.”

“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 says. “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.”

Renters aren’t faring much better. New research from NAR finds there is a growing gap between rental property costs and household income in many parts of the country.

The top markets where renters have seen the highest increase in rents since 2009 are New York (50.7 percent), Seattle (32.38 percent), San Jose, California, (25.6 percent), Denver (24.14 percent) and St. Louis (22.26 percent).

“In the past five years, a typical rent rose 15 percent while the income of renters grew by only 11 percent,” says NAR Chief Economist Lawrence Yun. “The gap has worsened in many areas as rents continue to climb and the accelerated pace of hiring has yet to give workers a meaningful bump in pay.”

What’s more, the share of renter households has been increasing and the homeownership rate is falling. The result, NAR concludes, has been an unequal distribution of wealth as renters continue to feel the pinch of rising housing costs every year.

Yun says an increase in construction of entry-level homes would help take some of the pressure off increasingly cash-strapped renters and encourage them to buy a home rather than rent one.