Home, wage gap widens
House value is 7.7 times income, census data show
Ken Kam, of Honolulu, scoped out second-home possibilities during a Seattle visit last month.
"It seems like it's an up-and-coming and popular place," he said while looking through a Queen Anne town-house development in which units start above $800,000. "The prices are still lower than in Hawaii."
Two doors down, Tim Hug and David Hofmann were washing a BMW outside the town house they moved into in June after relocating from San Francisco.
San Francisco's still more expensive, but Seattle's catching up, Hug said.
People such as those help explain new Census Bureau data, which show Seattle's home values rising considerably faster than incomes in recent years.
The 2006 numbers, released Tuesday, show the value of a typical Seattle home is 7.7 times the median household income in 2006 -- a 39 percent jump from the ratio in 2000.
Seattle's ratio of home value to income is higher than the county, state and nation, although that gap has narrowed in recent years.
But Seattle still is far more affordable than cities such as San Francisco, where houses cost 12.3 times the median income, and Honolulu, where they cost 10.7 times the median income. This ratio increased by more than 50 percent since 2000 in Honolulu and more than 60 percent in San Francisco.
That disparity is one reason King County regional labor economist Cristina Gonzalez does not expect much fallout from Seattle's rising prices on the wider economy.
"Compared to other West Coast cities, they're not unthinkable yet," she said.
Decreasing affordable housing forces people trying to work in Seattle to live farther away or in smaller spaces, Gonzalez said.
"It's going to affect people more so than the economy."
The new census numbers show the typical share of household income spent on housing in Seattle in 2006 was 27 percent for homeowners and 28 percent for renters.
Although the typical rent was far less than the typical mortgage payment, homeowners generally earn far more than renters.
Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University, said prices could not continue to rise so much faster than incomes indefinitely, although people are becoming accustomed to spending more of their money on housing.
Seattle and the surrounding area have so far managed to avoid the price declines showing up in markets that saw much more appreciation in recent years. Whether they can continue to do so will depend largely on the effect of tightening lending standards, rates on jumbo loans (those above the $417,000 cap for mortgage giants Fannie Mae and Freddie Mac) and how many people have to sell or lose their homes to foreclosure when adjustable-rate loans reset from low introductory rates, Crellin said.
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Home, wage gap widens
