A new study finds Sacramento area home prices have gotten out-of-reach for people who earn the median income or less. The data from research firm RealtyTrac show it’s cheaper to rent in Sacramento County than to buy.
“Which is a switch from a year ago when it was more affordable to buy than to rent,” says RealtyTrac’s Daren Blomquist.
“Home prices are up, although they are slowing, they’re still up seven percent from a year ago,” says Blomquist, “whereas rents in Sacramento County specifically are up only one percent from a year ago.”
RealtyTrac compared the Sacramento region’s median household income – of $53,742 – with the market values of three-bedroom homes.
Blomquist says the data don’t bode well for people who want to build wealth through home ownership. But he says there’s still plenty of demand for homes from cash buyers.
“What it says,” explains Blomquist, “is that we are in a situation, you know I don’t know if I’d call it a ‘bubble,’ but we’re in a situation where home prices have gotten out of reach of the median, and we’re looking at people who are making the median income, and buying a property’s becoming unaffordable.”
He predicts it’ll take a few years before people who earn the median income can afford to buy houses.
“The first step in that – home prices need to slow down honestly, and we are seeing evidence that that’s starting to happen. And the second piece of that is that wages need to accelerate or continue to grow and there’s some good signs on that part too.”
The data show weekly wages in Sacramento County have gone up by about 2.5 percent, from $1,069 at the end of 2013 to $1,095 a year later.
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