Americans living in rentals spent almost a third of their incomes on housing in the second quarter, the highest share in recent history. Rental affordability has steadily worsened, according to a new report from Zillow, which tracked data going back to 1979. A renter making the median income in the U.S. spent 30.2 percent of her income on a median-priced apartment in the second quarter, compared with 29.5 percent a year earlier. The long-term average, from 1985 to 1999, was 24.4 percent.
Redfin CEO Glenn Kelmann recently crunched the numbers on the rise in home prices as tech hiring picks up:
Three weeks ago, Redfin published a report showing that one in four Silicon Valley home-buyers is looking to buy a home outside of Silicon Valley, up from one in seven in 2011. This digital diaspora promises to bring some of Silicon Valley’s wealth-creation to cities across the country, especially Seattle, Portland, Austin, Boston and Denver. It has already begun to increase the cost of living.
But exactly how many technology workers does it take to increase home prices in these cities? To answer that question, Redfin took the hiring of the four largest Internet-related companies — Google, Apple, Facebook and Amazon, in Silicon Valley and beyond — as a proxy for each metropolitan area’s overall growth in technology hiring. What we found is that for every 1% increase in technology workers, there’s a roughly half-percent increase in home prices above and beyond the national rate of appreciation.
The urban farming non-profit has secured a 1.4 acre lot on which to build its first permanent farm and park. It’s now fundraising for construction costs.
Sinai [Wharton Professor Todd Sinai in a new policy brief] argues that for those who can afford it, buying a home may offer a way to sidestep this cycle of ever-rising housing prices and rents. “Because homeowners lock in their house price at the time of purchase,” he writes, ”when rents rise, a homeowner’s annual housing cost is unchanged.” But as the last housing crisis showed us, our current system encourages a deadly combination of irrational expectations, outright speculation, and unscrupulous lending practices that can do serious damage to the broader economy. Buyers, beware.
Ultimately, Sinai frames America’s worsening housing affordability crisis in unusually blunt and candid terms. “Already it is no longer the case that someone can automatically afford to live in the city in which she grew up,” he writes. “A debate needs to take place about the value our society should place on whether a household should have an unlimited right to choose where to live, and how much they should be insulated—if, at all—from the differences in cost.” The brutal reality may well be that more and more people will be unable to live in superstar cities, as they are sorted and shunted off into less desirable and less costly locations.