Why areas with good jobs lack affordable housing

Associated Press

WASHINGTON

It’s the new career trade-off:

Around the country, areas with the strongest job markets increasingly have some of the costliest homes. And areas with the most affordable homes lack a solid base of middle-class jobs that attract workers.

College graduates and younger families have been clustering in coastal cities such as New York, San Francisco and Seattle, where incomes are generally ample and solid middle-class jobs plentiful. Yet studies and government data show that homes in these areas have become prohibitively expensive.

The result is that the dream of homeownership for many is proving frustrating, being deferred or abandoned, even for people with comfortable incomes.

“This great mismatch is hurting middle-class people who would like to be home-owners,” said Nela Richardson, chief economist at the real-estate brokerage Redfin.

Roughly 40 percent of households in New York, San Francisco, Seattle, parts of Connecticut and Colorado, and Washington, D.C., earn more than $100,000 annually, compared with just 22 percent nationwide, according to the Census Bureau.

Areas that do offer inexpensive housing across the Midwest’s industrial corridor — Akron, say, or Fort Wayne, Ind. — lack the same breadth of career possibilities.

This trend likely has helped hold back U.S. economic growth. Cities with the strongest job markets would grow even faster if more people could afford to live there, noted Jed Kolko, chief economist at the online real-estate firm Trulia. The additional population would help spur further job growth, which, in turn, would strengthen the local economy and foster more middle-class jobs.

Two factors are getting in the way.

Tighter credit has made it harder to buy a home in the costliest areas with a down payment of under 10 percent.

Second, construction is running well below its pace from a decade ago.