By Mike LaFirenza
During the pandemic, remote workers across the country took advantage of the ability to live nearly anywhere. However, many companies are now requiring employees to return to the office. While the job market has cooled slightly in recent months, it is still hot, and abundant job openings mean that workers have plenty of job options to consider. At the same time, home prices have risen dramatically, potentially eroding increases in pay that jobs in some locales may provide.
After crashing in spring 2020, the job market has made an astounding comeback. Unemployment is at a relatively low rate (3.5%), and there are currently 1.7 job openings per unemployed worker. In mid-2022, this ratio reached a peak of 2.0, the highest it’s been in over two decades. This tight labor market is a boon to workers looking for new job opportunities; not only are there plenty of available jobs, but it means more bargaining power for workers and higher earnings potential.
Indeed, this very tight labor market has led to an increase in overall wages. Real median hourly wages have grown by 11.4% since 2000. However, home prices have risen even faster; the real median home price has grown by nearly 44% over the same period. While workers’ wages are rising, home prices—and price levels overall—are eating away at these earnings gains. As workers consider moving to take advantage of better-paying jobs, regional differences in home prices remain top of mind.
Despite having higher paying jobs, high home prices mean that it is still difficult to afford a home in some parts of the country. On a regional level, workers tend to earn more on the West Coast, but disproportionately high home prices mean that they must work more hours to afford a home. At the state level, the typical worker in Hawaii, California, and Utah must work over 100 hours per week to afford a median-priced home without being considered cost-burdened. This means the worker allocates no more than 30% of their monthly income to mortgage payments. In contrast, a typical worker in Mississippi or West Virginia doesn’t even need to work a full 40-hour week to comfortably afford a median-priced home.
To determine the locations where people need to work the most hours to afford a home, researchers at HireAHelper analyzed the latest data from the Bureau of Labor Statistics and Zillow. The researchers ranked states according to the weekly work hours needed to afford a median-priced home. The analysis assumes the worker is earning a median wage, makes a 20% down payment on the mortgage, and allocates less than 30% of their monthly wage to mortgage payments. Researchers also calculated the monthly mortgage payment for a median-priced home, the median home price, the median hourly wage, and the median annual wage.
The analysis found that residents of California need to work 126 hours a week to afford the $760,644 median home price. Out of all states, California requires the 2nd most weekly work hours to afford a home. Here is a summary of the data for California:
- Weekly work hours needed to afford a median-priced home: 126
- Monthly mortgage payment for a median-priced home: $3,778
- Median home price: $760,644
- Median hourly wage: $23.04
- Median annual wage: $47,920
For reference, here are the statistics for the entire United States:
- Weekly work hours needed to afford a median-priced home: 62
- Monthly mortgage payment for a median-priced home: $1,775
- Median home price: $357,319
- Median hourly wage: $22.00
- Median annual wage: $45,760
For more information, a detailed methodology, and complete results, you can find the original report on HireAHelper’s website: https://www.hireahelper.com/lifestyle/cities-that-need-to-work-the-most-hours-to-afford-a-home
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