Metropolitan areas across the nation where the affordability of housing has worsened over the last five years have seen a decline in job growth during that same period, according to new data.
Findings come from a new National Association of Realtors (NAR) study, which examined the top 174 metro areas, analyzed the shifting level of affordability and compared it to the pace of non-farm job growth in the third quarter of 2019 compared to average job growth from 2014 to 2018.
The report found that affordability rankings declined in 81 metro areas, which need more housing inventory to boost affordability, according to NAR chief economist Lawrence Yun.
“Job growth has slowed in these areas in part because limited supply is making homes less affordable,” Yun said. “As inventory continues to decline and affordability worsens, workers, businesses and companies are less incentivized to do business in these areas.”
Boise, Idaho, experienced the largest drop in affordability ranking. From 2014 to 2019, the median sales price of single-family homes in Boise increased 75 percent ($172,900 to $303,100), four times the growth rate in median family income of 18 percent ($62,000 to $73,101). Employment growth declined from an average of more than 3 percent from 2014 to 2018 to just 0.8 percent in 2019.
Tampa and Nashville are two other examples that have followed similar trajectories: Housing-price growth outpacing household income, with a resulting decline in job growth.
Metro areas in the relatively affordable Midwest region were also not immune to ranking declines. Grand Rapids, Louisville, Indianapolis and Columbus all experienced drops.
Perhaps in what is no surprise to anyone, the biggest affordability challenges are found in the West, particularly in California.
San Jose, Calif., was found to be the least affordable U.S. metro region in the data, followed by Anaheim, Los Angeles, San Francisco and San Diego.