Economist: Better jobs mean better home sales

The surest and straightest path out of the housing crunch is to bring in better paying jobs.

That was the take of University of West Florida economist Rick Harper. He spoke this week at a gathering of 200 Florida economic development officials at the Intercontinental Hotel in Tampa.

Harper reiterated how Florida home prices have outpaced wages. He said median home prices used to be 3.2 times household income. In other words, if you and your wife made $100,000, you'd buy a house worth $320,000.

But during the last boom things got out of whack. The same home now costs 4.5 times household income, or $450,000 based on the previous scenario.

Of course, high-skilled workers help regions in ways other than housing market resuscitation. Quoting Bill Gates, Harper said each such worker spins off four additional jobs.

The "worst single thing" that could hit housing would be restrictive immigration policies, Harper said. By this he meant restrictions on legal immigration, not the illegal variety we associate with Rio Grande crossings.

Later in the economic development conference, another professor said the competition for good jobs can only get more heated.

Daniel Borgia of Florida Gulf Coast University said the tens of millions of skilled workers emerging in China and India will suppress our wages.

Borgia's worst case scenario: Average U.S. wages have already peaked. They'll never be higher than they are now - ever.

Let's hope he's wrong. The thrust of the conference was that innovation and productivity - not importing low-wage unskilled workers "with nothing else to lose" - are the path to a modern economy.   

Comments

[Greenville NC Real Estate]

Harper reiterated how Florida home prices have outpaced wages. He said median home prices used to be 3.2 times household income. In other words, if you and your wife made $100,000, you'd buy a house worth $320,000.
But during the last boom things got out of whack. The same home now costs 4.5 times household income, or $450,000 based on the previous scenario.

[alex]

Article on Cnn.com "Housing Affordability Best Since 2004" has Tampa ranked 114 in the country. Article states that median family income here is $56,500 and that median sales price was $167,000. I'm no rocket scientist but, isn't this finally within the 3x's rule that everyone is talking about?

[Fuzzy Bear]

They'll never be higher than they are now - ever.

I am afraid he is correct as more and more jobs are being sent offshore to low wage countries such as India.

In order for the american worker to compete with the low wage countries, the cost of housing, etc. must drop in order for our wages to compete with offshore salaries.

[Tino]

FAR still has the March 2008 Tampa Bay median price at $180,500, down from $219,800 a year ago.

http://media.living.net/statistics/2008/March%202008%20home%20chart.pdf

That is the price that deals are getting done at, and there are a lot of fire sales in the mix that the average buyer isn't getting a crack at.

Unfortunately, selling prices are probably still 30-50% higher than actual selling prices. Unless you have the ability to beat down a seller, prices are still out of reach in many areas.

1300 sq ft, 2-bedroom condos in downtown Tampa are still being offered at $400-500k. You can probably buy one for 40-50% off, but you may have to put in a lot of offers to find a seller who actually wants to sell.

[Fuzzy Bear]

I'm no rocket scientist but, isn't this finally within the 3x's rule that everyone is talking about?

It looks like we are headed that way, but housing still has a ways to go before it has corrected across the board in all of the Tampa Bay area.

If you look back during the boom, the average medium income of $56,500 was the basis of the affordability issue.

[alex]

"prices are still out of reach in many areas."

No offense but, since when have all areas been affordable to everyone? People who can't afford expensive areas shouldn't look in expensive areas. I know not to look on Davis Islands for a house because I can't afford it and I have never been able to afford it. This down turn in the market isn't going to change that.

[alex]

"1300 sq ft, 2-bedroom condos in downtown Tampa are still being offered at $400-500k."

Not true at all. Go on ziprealty.com or realtor.com and you will see a bunch of properties (2/2 approx 1300 sq ft) being offered b/t $225K-$300K. Also, you will pay a premium for location so this seems expensive compared to other parts of town.

[Tino]

I just looked at realtor.com. The lowest price for a 1,300 sq ft unit is about $250k, so I stand corrected. There are also some bank-owned properties going for as low as $160/sq ft, which is very interesting.

However, some clueless sellers are still asking $300-400k for 600-800 sq ft shoeboxes, and yes, 1300 sq ft, 2-bedroom condos in downtown Tampa are still being offered at $400-500k, which will never be sold at those prices.

[Fuzzy Bear]

I just looked at realtor.com. The lowest price for a 1,300 sq ft unit is about $250k,

Perfect example of an overvalued and overpriced home! The listing price gives theimpression as if this is a flipper/investor home whereas the flipper/investor is upside down and stuck.

Good point Tino!

[alex]

Why would they sell if others are being offered at more reasonable prices? Admit it, though, this isn't new. Even in good markets, some sellers can be very unrealistic. As far as Fuzzy's statement at 12:10...again, I am no rocket scientist so what are you talking about?

[alex]

Just looked at ziprealty.com...there are some nice 1/1 condo's downtown for about $150-$160K. Not bad for a first home, if people would stop having to have it all (2/2 $300K when they can only afford $200K).

[Florida - Paradise Lost]

'The "worst single thing" that could hit housing would be restrictive immigration policies, Harper said.'

How about charging double-triple property taxes to first-timers? For life!

Step right up, folks - it's a beautiful state, but you'll have to pay much, much more than the rest of us.

Until you die. So sorry.

But please move here - we need someone to pay our taxes. And it doesn't matter if you buy or rent - you'll still pay more than us (every year for as long as you live here).

Please - we're going broke down here. Seriously.

Down Periscope!

[Fuzzy Bear]

Just looked at ziprealty.com...there are some nice 1/1 condo's downtown for about $150-$160K. Not bad for a first home

Now add in the taxes, insurance and maintenance fees to the mortgage cost and it puts the qualified buyers income level at $56,500 to afford this place. That is the problem with Condo's and even areas with CDD's.