A house will be the largest purchase that many Americans make in their lifetime. Unfortunately, for the majority of the country, that purchase is getting more and more expensive.
A new report by RealtyTrac found that home prices have been rising at a higher rate than wages in nearly two-thirds of U.S. housing markets. Despite the major pullback in housing prices since the peak of the bubble, prices in 9 percent of U.S. markets remain above their historical averages compared to wages.
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While the vast majority of housing markets are still affordable by their own historic standards, home prices are floating out of reach for average wage earners in a growing number of U.S. housing markets, Daren Blomquist, senior vice president of RealtyTrac explains.
Although recent data indicating that house flipping is at all-time highs in certain markets, prices are still nowhere near their bubble peaks. The average worker now needs to devote about a third of his or her wages to a monthly mortgage payment. That number was about half in 2006.
However, in the priciest markets in the country, New York City and San Francisco, home buyers must spend 95-120 percent of the average wage on mortgage payments.
So far this year, the SPDR S&P Homebuilders (ETF) (NYSE:XHB) is down 4.5 percent.
Disclosure: the author holds no position in the stocks mentioned.
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