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Home prices grew 4 times faster than income: Study
The American dream of homeownership is becoming less accessible, as home prices have increased four times faster than incomes over the past six decades, according to a study by Clever, a real estate company.
The study, which relied on census data, found the median price of a house increased 121 percent since 1960. Median incomes, in the meantime, grew a meager 29 percent.
The cost of housing has also become more burdensome for renters. The study found that rental costs in the same period rose 72 percent, about 2.7 times faster than income. The study adjusted prices for inflation.
"Rising rents and increasing home prices make it harder than ever to save for a down payment and afford monthly mortgage payments," Eylul Tekin, the study's author, wrote.
Whereas workers could once expect to buy a home for 2.1 times their annual salary, by 2017 median home prices amounted to 3.6 times the median salary, putting them out of reach for many workers.
"Homes are increasingly unaffordable, leading to unstable housing markets where demand can't meet supply," Tekin said in the study.
The effects are from from evenly distributed.
In the West, prices grew 7.5 times faster than income, whereas in the Midwest, prices and incomes have stayed relatively in line.
"The Midwest might be the last region homeowners can realistically afford," the study said.
In San Jose, California, the city with the highest home prices relative to earning, homes cost 9.69 times as much as annual income. In Toledo, Ohio, that ratio was 2.14.