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Home Price Plateau Possible in Areas Where Wages Can't Keep Up

Thursday, March 26, 2015

While a study released on Thursday by RealtyTrac shows a huge discrepancy between the growth in home prices and increasing wages, it appears that housing in most of the country remains affordable.  The California company looked at wage growth and home price appreciation over recent two year periods and found that the former is far from keeping up with the latter.

In its analysis RealtyTrac used data on median home prices taken from deeds registered in 184 metropolitan statistical areas in the two years that ended in December 2014 and Bureau of Labor Statistics wage data from the second quarter of 2012, when home prices hit bottom and began to recover, and the second quarter of 2014.  It adopted the six month time lag between the beginning of the two two-year time periods based on the hypothesis that a change in average wages would take at least six months to impact home prices. 

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