While we specialize in leasing commercial office space, we watch the housing market very closely. Housing is a precursor to office space growth. Regular readers know this housing market recovery has been slow and multifamily has been on fire for the past 5-6 years. While there are lots of reasons for this, affordability may be one of them.
The below infographic shows the average salary needed to buy a home in 27 US cities. Some takeaways:
-Phoenix sits comfortably at $43,938—still not cheap.
-Larger cities, like New York City and Los Angeles, require nearly $100,000.
-San Francisco sits at the top, requiring employees to earn a whopping $147,996. This is one reason why we are seeing a ton of companies grow or expand to Phoenix from the Bay area.
Why is this important? It has a huge effect on companies’ decision on where to locate. Over the long haul, millennials will want to own their homes. Access to affordable housing should be on every decision maker’s checklist when they look for office space.
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This infographic shows how much you need to make to buy a home in 27 US cities
The popping of the Greenspan-era housing bubble took about six years in total to fully “deflate”.
Most U.S. housing markets peaked sometime in 2006, and it wouldn’t be until just before the third-round of quantitative easing in 2012 that this fall would finally be cushioned. Since then, the combination of QE and record-low interest rates have helped re-inflate the housing market. For better or worse, real estate in many U.S. cities are now approaching or passing their 2006 housing highs, but with a growing disparity between individual metropolitan areas.
Today’s 3D map comes to us from HowMuch.net, and it shows the very different salaries needed to buy a median home in 27 different U.S. metropolitan areas. The salaries range between $31,134 to $147,996, which is a discrepancy of over $100,000.
At the low end of the spectrum, it takes a salary of between $30,000 to $40,000 to buy a home in most metropolitan areas in the Midwest. In St. Louis, for example, the salary needed to buy a home is $34,778. Pittsburgh was the least expensive city analyzed, where a salary of $31,135 could buy the median house in the city.
At the high end is any metropolitan area in California, for which closer to six figures is now needed. San Francisco has the most expensive housing in the country, where residents must make $147,996 a year to be an average homeowner. However, Southern California is not far behind the Bay Area, where salaries of $95,040 and $103,165 are required to buy in Los Angeles and San Diego respectively.
See the full data set, including mortgage rates, monthly payments, and median house prices here.
West Coast envy
Which cities have rebounded the most since the popping of the housing bubble?
According to The Economist’s interactive chart on U.S. housing price indices, the average U.S. market recovery between 2006 peak and 2012 trough has been about 63.9%.
The Eastern half of the country has struggled to rebound to 2006 housing highs, with New York City, Baltimore, Philadelphia, Chicago, Tampa, Miami, and St. Louis all recovering below the above average mark.
In contrast, prices in the West are soaring: San Francisco, Houston, Dallas, Denver, and Portland have all met or exceeded their 2006 highs. Meanwhile, Los Angeles, Seattle, and San Diego have recovered better than average.
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