The jobs recovery is no match for the housing recovery. And that's making it hard for many Southern Californians to afford to buy a home here.
That's the thrust of a new report out Thursday from real estate data firm RealtyTrac, which analyzed wage growth and home price appreciation in markets across the country and found that, in most places, wages are sorely lacking.
While the average weekly wage earned by workers nationwide grew 1.3% from the second quarter of 2012 to the second quarter of 2014, home prices in that time grew 17%. In Los Angeles and Orange counties, the gap was even wider, with home price growth of 28.4% compared to wage growth of 2.5%.
While high local demand is certainly one factor in rapid price growth, so is a growing influx of outside money - from institutional investors, foreign buyers and other cash purchasers, said Daren Blomquist, RealtyTrac vice president. The good news for local buyers, he said, is that price growth is likely to slow.
"Those markets with the biggest disconnect between price growth and wage growth during the last two years are most likely to see plateauing home prices in 2015 until wages catch up," he said.
Indeed, price growth in the six-county Southland has been basically flat since last spring, according to CoreLogic DataQuick, while the region's job market has improved.
Still, Southern California - at least parts of it - has become a global housing market, notes Mark Hughes, chief operating officer at First Team Real Estate. And that means that many locals will get priced out.
"The dynamics driving affordability, or lack of affordability, have as much to do with the new global nature of real estate as much as they have to do with the speed of local wage acceleration," he said. "Southern California will remain increasingly unaffordable from within, but a hot commodity worldwide."