The middle class is finding it increasingly difficult to afford new homes. But the residential market isn’t correcting itself to accommodate them, a new report from John Burns Real Estate consulting suggested. Instead, the future of new home demand is being determined by high-income job growth.
“Strong wage growth seems to be right around the corner,” wrote Adam Artunian, John Burns manager and author of the report.
In the current market, the middle class is hurting.
It is not just that new homes are outpricing resale homes by historical margins, but also that the ratios of home price and mortgage payments to median incomes exceed historical averages in nearly all of the nation’s 20 largest housing markets.
But Artunian believes that over the next few years, a mixing of labor shortages and a new demand for high-income workers will likely push up average incomes; it will be that swell of earnings, Artunian wrote, that dictates the direction of new home demand.
The prospects in Atlanta are promising. Year-over-year, the Dogwood City saw 4 percent growth in high-income jobs, which equates to 29,200 additional positions (751,600) overall.
The trajectory of the city in recent years has been up, and if Artunian is correct in his speculation, the city’s new home market will move in a similar direction.
|Rank||Metro||Total High-Income Jobs||High-Income Job Growth||High-Income Job Growth (%)|
|1||San Jose, Calif.||343,800||26,200||8.2|
|3||Riverside-San Bernardino, Calif.||208,900||10,200||5.1|