Where Jobs, Affordable Housing Intersect

It’s a formula that every homeowner and renter–and every lender–tries to calculate before making the big decision: how much housing can I afford?

A new report from Zillow Inc., Seattle, and LinkedIn, San Francisco, shows that the answer depends on both the job and the housing market. The companies used job listings data, salary data and the percent of workers hired in the past year in three industries: health care, technology and finance. By analyzing income tax rates and Zillow median rent data, they found housing markets across the country where those workers can pocket the largest share of their income after paying their mortgage or rent.

For example, the study found that tech workers do okay, regardless of which housing market they live–even the San Francisco Bay area. With a median home value in the San Francisco area of $789,300, tech workers take advantage of their high salaries to create a cushion.

But not as well as Seattle. Seattle tech workers who own their homes can expect to have about $2,000 more in disposable income each month than tech workers in the Bay Area. Seattle tech workers keep an average of 59 percent of their income after paying taxes and housing, while Bay Area tech workers pocket only 37 percent. Tech workers who rent in Seattle can expect to have around $5,500 left over each month after covering taxes and rental housing costs. In San Francisco, they’re left with about $4,000.

By contrast, taking a tech job in the Denver area, where the median home value is $348,700, actually costs the average Denver tech worker about $140 a month, considering lower salaries there.

Salaries for other industries don’t hold up as well in the San Francisco area, though. Even highly-paid finance workers keep only about 32 percent of their incomes after paying for housing and taxes. In Charlotte or Chicago, they can pocket a median of 61 percent.

Healthcare workers have the best shot at a job and an affordable home in Phoenix, Indianapolis and Boston, according to the analysis. Among large markets, Charlotte, Chicago and Dallas offer the greatest chance of a good job and affordable housing for finance workers.

For technology workers who rent, Seattle, Austin and Pittsburgh, Pa. came out on top among the housing markets analyzed, with the Bay Area fourth. Finance workers will find job and rental housing harmony most easily in Charlotte, Dallas-Fort Worth and Phoenix. Healthcare workers’ best bets are Phoenix, Indianapolis, Ind., and Boston.

Zillow Chief Economist Svenja Gudell noted over the past decade, housing prices in coastal markets have shot up, in large part due to demand from workers following high-paying jobs. She said West Coast housing affordability is the worst in the nation; renters and home owners there often spend nearly half the median income to rent a typical home, while a rental in the middle of the country costs 25 percent of the median income.

“High demand and inventory shortages have driven up housing prices in some markets so much that even if you land a great job, the salary might not cover living within commuting distance,” Gudell said. “On the other hand, the nation’s most affordable housing markets don’t always offer plentiful employment opportunities.”