Nearly three-quarters of all families in the United States cannot afford to buy a new single-family home at the national median price of $426,000. Of course, many cities across the country are dealing with home prices well above that midpoint.
New York and San Francisco are cities known for their abundant job markets and metropolitan populations. They are also included in the list of the two most challenging real estate markets in the country. In the current economic climate, additional financial pressure on housing is driving some American workers to leave cities, regardless of their employment status.
A recent study of Portland Real Estate analyzes data from the National Association of Realtors, the US Census Bureau, and the Bureau of Labor Statistics to assess the ratio of new vacancies per building permit to measure housing shortages in metropolitan areas.
Beyond building permits
The Portland Real Estate study ranked cities based on a relationship between job growth and building permits to illustrate the imbalance between the number of people the area is looking to hire for employment and available housing. The study focuses on the number of new jobs for each building permit issued.
Job markets in some areas of the country may be recovering from layoffs in recent years, but that doesn’t necessarily translate to affordability in other regions. With ongoing housing inventory problems across the country, getting a better job may not be your ticket to the housing market.
Where are the US hotspots for limited housing inventory? Probably different from where you would expect.
Cities with the highest proportions of job growth and building permits
New York City ranks first as the city with the highest ratio, with 31.4 jobs created for each building permit. Despite a plentiful job market, this signals a severe housing shortage in the city. An increase in new job openings increases the demand for rentals, driving up home prices and making it increasingly difficult for residents to obtain affordable housing.
San Francisco it comes in second, with a ratio of 29.2, another example of a growing job market outpacing residential construction in the city.
Springfield, Massachusetts, secures third place with a ratio of 26.6 new jobs per building permit, reflecting similar concerns as its first- and second-place counterparts.
In fourth place, urban Honolulu gets a ratio of 25.1, and Syracuse, New York, ranks fifth with a ratio of 21.8.
The other US metropolitan areas that made the top ten list are Boston, with a score of 20.4; Miami, with 20.2 points; Chicago, with 19.5; New Haven, Connecticut with 19.3 and Los Angeles, with a ratio of 18.3.
These high-ranking cities compare to a national average among all cities of 7.64 jobs per building permit.
Among the top ten ranked cities, three states rank more than once: there are two cities in Massachusetts, two in New York and two in California. Each of these states has strong labor markets and a high metropolitan population size.
It is also worth noting the geographic distribution of the highest-ranking cities, with 50% of the top ten located in the East Coast, while 20% are on the west coast and the rest are spread across the country.
What House Hunters Can Expect
While it’s hard to predict with certainty what’s to come for the housing market, rising interest rates and subsequent mortgage rates continue to put pressure on people looking to buy in the coming months. Renters in cities with a high proportion of jobs for building permits may continue to face stiff competition when applying for homes and rates inflated to account for demand.
Pay attention to announcements interest rates from the Federal Reserve will provide valuable insight into affordability forecasts for the remainder of 2023.
This article was produced by Media Decision and distributed by Wealth of Geeks.
