NEW YORK (TheStreet) — Home prices are rising 13 times as fast as Americans' wages — bad news for renters who aim to own their own places and sellers who want property values to keep going up.
"Homeownership is getting further out of reach for the average wage earner in America," says Daren Blomquist of RealtyTrac, which recently analyzed median wage and home-price growth between 2012 and 2014.
The firm found that while the typical worker's earnings inched up just 0.3% during the period, median home prices shot up 17%.
Blomquist says that's particularly bad news for renters who hope to switch eventually to homeownership. "If buying a home is out of reach, that takes away one of the most tried-and-true wealth-building mechanisms that Americans have," he says.
RealtyTrac attributes the problem to wages that haven't snapped back from the Great Recession nearly as much as home prices have.
Blomquist says that when property values bottomed out around 2012, investors and well-heeled consumers looking for homes to live in rushed in with either all-cash offers or big down payments. Neither type of buyer had to worry about earning enough money to cover mortgage bills, so they pushed home prices up faster than local wages grew.
"This recovery has been driven not by the hoi polloi, but by cash-rich buyers and investors who haven't been constrained by income," Blomquist says.
RealtyTrac measured earnings changes by looking at U.S. Bureau of Labor Statistics average weekly wage data for 2012 and 2014's second quarters, the latest periods with figures available at the time the firm conducted its study.