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As home prices continue increasing, wage growth has not. Median home prices jumped 7.2% last year while wages only increased about 3.7%, according to Realtor.com. And even now, there’s not much positive news about wage growth. Realtor.com says wage growth could be even lower as low-wage workers were more likely to get laid off, skewing the data. Realtor.com wanted to see where home prices and wage growth have the highest discrepancies to find the areas where locals are at risk of being priced out. The site found the largest wage and home price gaps in smaller areas where wealthier people and investors have sought out second homes.
Many are vacation areas where people are now able to remain full time, and one (Jones County in Mississippi) was made famous by the popular HGTV show “Home Town.” But locals in these places aren’t seeing enough of a boost in their paychecks to be able to afford the newly exorbitant prices.
“Now, more Americans have flexibility around where they live and work, and that’s put these lesser-known markets on the map,” says Ali Wolf, chief economist at real estate research firm Zonda. “Those relocating while continuing to work from home are often bringing a higher wage and some home equity with them. This has helped pushed home prices up far faster than the growth of local incomes.”
Some economists say an influx of buyers could be helpful in the long run, especially if these new arrivals are pouring money into the local economy. But for now, it’s caused a housing crunch in places that may have already been under economic stress.
“The jury is still out on what this means long term,” Wolf says. “Ultimately, though, some locals will get hurt as rising home prices and rents strain their budgets.”
To come up with this list, we looked at weekly wages by county during the last three months of 2020 compared with the same period in 2019, using Labor Department data. Then we compared the change in real estate list prices in more than 3,000 counties across the U.S. over the same period. To ensure accuracy, we made sure there were more than 30,000 households in each of those counties and that each county had at least 12 listings per month. To ensure geographic diversity, we limited this list to one county per state.
