How is this for a statistic? Close to 70 percent of markets today are unaffordable. Incomes are being far outpaced by prices—a gap that persists even as employment gains ground—and inventory is rapidly vanishing. By all accounts, affordability is one of the critical issues in real estate this spring.
For buyers, their careers directly impact what they can purchase—and, generally, the closer you are to your job, the more you pay for property. So, is affordability better for those in higher-paying professions? According to a new report* by Trulia, the answer depends on location.
In Dayton, Ohio, for example, doctors can afford almost 100 percent of the listings on the market, but in Chicago, the amount dwindles to 87.4 percent, and in San Francisco, the share tumbles to 30.5 percent.
What about Silicon Valley workers? Affordability is a challenge for them as well. In San Francisco, just 4.8 percent of listings are affordable for computer programmers; in San Jose—the hub for gigs in tech—the amount is higher, but lean, at 11.8 percent. (Developers have more prospects in Seattle, where 30.9 percent of listings are within reach.) By contrast, in Dayton, computer programmers can afford 87 percent of listings; in Chicago, 55.8 percent.
In the Bay Area—where, according to Zillow, appreciation is 10.4 percent year-over-year—big bucks-earning MDs and programmers are pricing out. How, then, can lower-paid professionals get their piece of the pie? Of the area's listings, just 2.4 percent are attainable for first responders, 0.7 percent are feasible for teachers and 0.1 percent for restaurant workers.
Affordability by occupation:
*Analysts assumed a debt-to-income (DTI) ratio of 31 percent or less, and a 20 percent down payment on a 30-year, fixed mortgage with 4.44 percent interest. Their calculations also included homeowners insurance and property taxes.
For more information, please visit www.trulia.com.