While many of the nation's homeowners are worried about falling home prices, others would argue they're not falling fast enough.
You might find them in Santa Monica, Calif. There, it takes just over 17 years of total earned salary for the median-income household to afford the median-priced home. In Berkeley, Calif., it takes almost 15 years and for Passaic, N.J. households, it's a more reasonable 13 years.
To find the rest of the spots on our list, we used data from Demographia, a St. Louis-based demographic research firm that draws on U.S. Census data for areas considered suburbs in the nation's 50 largest metros. Based on these numbers, we calculated how many years of total salary it would take the median household to afford the median house to find the country's most overpriced areas.
Based on our numbers, California suburbs are the most difficult to afford. In addition to Santa Monica and Berkeley, where the median home costs $1.05 million and $752,500, respectively, they include Hawthorne, where it takes buyers 14.6 years to afford the $585,700 median-priced home.
Such prices make other areas on our list seem like a bargain. In Skokie, Ill., the median-priced home rings in at $396,300, and it takes the median-earning household 6.1 years to afford it. In Alexandria, Va., the median-earning household must wait 6.7 years to buy a $539,200 home.
How do these suburbs reach such price heights? Much of it has to do with how homeowners, especially wealthier ones, cluster within cities.
When people move to an area, they often do so because of a job. That's why migration figures and job growth are invariably intertwined. As an expanding local economy lifts salaries, housing prices grow because buyers have the money to pay for better properties.
Salt Lake City is a perfect example. The metro's high job-growth rate has resulted in huge in-migration and a housing market where prices grew by double-digit percentages last year.
But the richest residents often head to the market's prime suburbs, which feature perks like pretty views, bodies of water and parks that are in short supply elsewhere.
Those suburbs often begin as small residential centers, and are designed to be low density and non-commercial. But as they grow in population, they turn into economic centers of their own, acting as satellites to the principle city instead of escapes from it. When a suburb adds stores, restaurants, factories, malls, office buildings and other commerce centers, it requires a wider range of people, with a wider range of financial characteristics to keep it viable.
In a large suburb like Santa Monica, for example, where the majority of houses are out of reach to the median earner, there are million-plus beachfront condos and homes that are occupied by the Hollywood set; nearby are a high inventory of small apartments rented to 70 percent of the local population.
While California suburbs in particular have always been expensive, the spreads between median income and median price have never been this exaggerated. That's because the housing boom pushed prices up far faster than incomes rose. With every dollar prices rise above what incomes can cover, it becomes more difficult for renters to move into buying.
Another obvious place affected by this trend was South Florida, where prices spiked during the boom, but incomes and economic activity didn't rise accordingly. West Palm Beach, Fla., and Pompano Beach, Fla., both on our list, are good examples of inflated income-to-price spreads, at $318,300 to $45,250 and $279,500 to $42,409, respectively.
The economic effect?
"This is brand new," says Wendell Cox, president of Demographia. "It's all happened in the last six years and we're not sure what it means yet."
One thing it does mean is heavy out-migration. Cox points out that many of the areas with the highest spreads — in and around San Francisco and Los Angeles, most notably--are rapidly losing population to places in the South and Southwest, locations where affordable housing and business costs have drawn people and jobs from coastal population centers.
But incomes don't necessarily need to fall in line with housing prices for values to trend upward; just take a look at the extreme counterexample in New York City.
Now, no suburb is likely to ever achieve the density and economy of New York City, but what has made the city's legendary lack of affordability sustainable is the balance between the prices of homes and what different market segments can pay for them. People don't often move from renting to buying there, but so long as there are enough people earning enough to sustain the price increases, it's not critically important what the median income is.
"The average wage in the financial district is $330,000, but the overall census numbers are around $40,000," says Jonathan Miller, director of research at Radar Logic, a New York real estate firm, of the city's median income level. So long as the number of pricey homes available doesn't outpace the number of people able to buy them, he says, a market can be in balance, despite an apparent imbalance in income-to-home-price ratio.