The income gap between the US’s richest and poorest metropolitan regions has reached its widest on record, shaping an uneven housing recovery that threatens to hold back the broader revival of the world’s largest economy.
The gap has narrowed and widened in past cycles, but the rebound from the most recent financial crisis has seen the ratio at its most unequal since data collection began 45 years ago, fuelling policy makers’ concerns.
Commerce and Labor Department data for the 100 largest metropolitan areas by population found the income disparity between the 10th most expensive region and the 90th by home prices in 2013 was the widest since records began in 1969.
The research, analysed by property website Trulia, shows Boston, ranked at 10, reporting a per-capita income 1.61 times that of Cincinnati ranked at 90. At its low point in 1976, the gap was 1.36 times, between San Francisco and El Paso.
A patchy labour market recovery has meant significant variations in job and income growth between regions across the US, which in turn has intensified the divergences across the country’s housing markets.
"Housing markets are playing out at very different speeds partly as a result of the lack of geographical breadth in the labour market. Certain sectors of the economy are performing better than others propelling some housing markets over others," said Fannie Mae economist Mark Palim.
While some areas are experiencing bubble-like conditions, others are flailing. In Austin, Texas, a surge in technology jobs has driven demand. But in Akron, Ohio, which is struggling to boost employment through a new manufacturing base, house purchases have been more muted. In the government town of Sacramento, California, anxious homebuyers are waiting on the sidelines.
Stanley Fischer, Janet Yellen's deputy chairman at the Federal Reserve, highlighted the central bank's concern about housing in a speech this week. "
The housing sector was at the epicentre of the US financial crisis and recession and it continues to weigh on the recovery,” he said. The number of Americans in work has passed pre-recession peaks. But there has been little lower and middle-wage growth.
– Copyright The Financial Times Limited