Home prices in the Charlotte area grew seven times faster than wages did over the last two years.
Weekly wages in Charlotte in the second quarter of 2014 were $911, up 1.2 percent from the same quarter two years prior, according to a report released Thursday from real estate research firm RealtyTrac. The median Charlotte home price in December 2014 was $152,000, up 8.6 percent from two years before, the report showed.
Charlotte’s home value-wage growth discrepancy was dwarfed by national figures, though. Nationwide, home price appreciation outpaced wage growth in 76 percent of markets and grew 13 times faster than the rate of wage growth on average across the U.S., the report said.
Over those two years, wages increased 1.3 percent nationally and home values grew 17 percent, according to RealtyTrac.
The report’s figures underscore how the housing market is gaining momentum at the same time wages are stagnating across the country. While home price appreciation helps homeowners build wealth, it also makes it difficult for first-time homebuyers to enter the market.
Charlotte’s home prices didn’t plunge as much during the recession as those in some other cities – such as Las Vegas – so their bounceback has been steadier.
Daren Blomquist, vice president at RealtyTrac, called Charlotte’s figures “encouraging” when compared with other markets, where homes have regained much of their value as investors and cash buyers came in to scoop up cheap property.
“The affordability factor is still good in Charlotte. At least if you look at it relative to other markets,” Blomquist said. “The median income earner would need to spend about 22 percent of their income to buy a median-priced home in Charlotte, which is still healthy. Typically anything under 28 percent is considered affordable.”
Jed Kolko, chief economist at Trulia, calls the trend of home price growth being driven by a strong local economy and jobs rather than speculators the “rebound effect.”
“As home prices have increased and gotten close to long-term normal levels, and as investors and foreclosure sales have become a smaller part of housing activity, fundamental drivers of housing demand – like job growth – have taken over again,” Kolko wrote in a recent report.
Rising home prices, when paired against flat wages, Blomquist said, are another reason why many would-be homeowners opt to rent instead.
“If your wages aren’t going up, it’s going to be tough to come up with a down payment. It’s going to be tough to have the confidence to buy a home as opposed to renting, which is much less of a commitment,” Blomquist said.
Rent prices in Charlotte are among the fastest growing in the country, according to a recent report from Zillow.
A recent home price report from S&P/Case Shiller showed that Charlotte’s home prices rose 3.5 percent in December from the prior year, a slightly slower pace than the national average pace of growth.