Connect with us

Hi, what are you looking for?

The American Genius Real EstateThe American Genius Real Estate

NAR Reports

How minimum wage increases are impacting housing

As minimum wage increases sweep the nation, we ponder what impact this has on housing and the affordability of owning a home.

minimum wage mortgage fha

How does the 2016 minimum wage increase impact one’s ability to purchase a house or apartment? Well before we jump into that argument a few facts are in order: the federal minimum wage of $7.25 per hour was instituted back in July of 2009.

The new minimum went into effect on January 1st of 2016. For the most part, the new minimum wage will range from about $7.50 to $9.75 an hour with a few state (California and Massachusetts) weighing in at $10.00 an hour.

Minimum wage, minimal housing

The Housing Stats team at the National Association of Realtors (NAR) did the legwork of computing how a minimum wage job translates into housing affordability.

Calculate full-time employment of 40 hours per week for 50 weeks per year and you come up with an affordable monthly payment which is no more than 25 percent of income for mortgage principal and interest. They then calculated an affordable loan amount, for a thirty-year fixed rate mortgage at a 4.0 percent interest rate (see below).

Does not bode well for lower income folks

NAR points out that “finding affordable homes is likely to be difficult as these amounts are well under the national median. And while there are homes in these price ranges in some locations, they are getting harder to find.”

According to recent Existing Home Sales data from the NAR, sales of homes priced under $100,000 have been declining. Furthermore, in 2015 through November, sales under $100,000 were 8.5 percent lower than the same period in 2014.

Advertisement. Scroll to continue reading.

Given strong demand, limited supply, and continued low construction, these trends are likely to continue. That does not bode well for someone barely getting by and hoping to purchase a home or an apartment.

NAR reiterates the plague of affordability

While it’s no secret that minimum wage workers come from families of all income levels. The average share of income earned by a near-minimum wage worker is just over half (54.3%). Additionally, nearly one-quarter (23.7%) of these workers are the sole providers of family income.

We’ve reported before on the state of the housing market. Purchasing a home is difficult enough for someone who is earning three figures. But the outlook for lower income wage earners is challenging at best and bleak at worst.


Written By

Nearly three decades living and working all over the world as a radio and television broadcast journalist in the United States Air Force, Staff Writer, Gary Picariello is now retired from the military and is focused on his writing career.


The Daily Intel
in your inbox

Subscribe and get news and EXCLUSIVE content to your email inbox.




It may come as a shocking fact that almost half of the young adults in the US choose to continue to reside with their...


(EDITORIAL) Inside Ukraine, people are fighting off the battlefield. This time for fair housing. Also, is it affecting the U.S. market?


(HOMEOWNERSHIP) It’s a seller’s market with housing supply at an all-time low. Here’s what buyers are doing to increase their chances of buying a...

Real Estate Big Data

(REAL ESTATE) With Chinese real estate struggling and fears of a major conglomerate not making good on billions in debt, investors flinched - what...

The American Genius' real estate section is honest, up to the minute real estate industry news crafted for industry practitioners - we cut through the pay-to-play news fluff to bring you what's happening behind closed doors, what's meaningful to your practice, and what to expect in the future. We're your competitive advantage. The American Genius, LLC Copyright © 2005-2022