It’s either a great time to buy a house—or you’ll never be able to afford one.
A lot depends on where you live.
Home prices have perked up again after taking a breather last year. U.S. single-family home prices rose in December, especially in the western half of the country, according to the latest numbers from the widely watched S&P Case Shiller home price index.
And while the job market is also improving, those gains have yet to show up in workers’ paychecks. On Friday, the government reported that U.S. employers added 295,000 jobs, pushing the jobless rate down to 5.5 percent from 5.7 percent.
Those new jobs will help bring more would-be home buyers back into the market. But when they go house hunting, some of them will find their wages don’t go far enough to close the deal. Last month, the average hourly wage crept up just 3 cents to $24.78 an hour.
The average hourly wage has risen by just 2 percent over the past 12 months, barely edging out inflation. House prices, meanwhile, gained 4.5 percent in December over prior year, according to the S&P Case Shiller index.
Lower mortgage rates have kept homes affordable in many parts of the country. But the range of affordability is huge, according to an analysis of county-level home prices and incomes.
In Allegany, New York, Blackford, Indiana and Wayne, Michigan, the cost of buying a median-priced home will take up just 8 percent of the median household income, based on 2013 Census data and Zillow’s Home Value Index. (We’re assuming the buyer puts 20 percent down, gets a 30-year fixed rate mortgage at 3.8 percent, pays property taxes of 1.2 percent of the home’s value and buys an annual home insurance premium of $3.50 per $1,000 of home value.)