Why areas with good jobs have hard-to-afford homes

It's the new career trade-off:

Around the country, areas with the strongest job markets increasingly have some of the costliest homes. And areas with the most affordable homes lack a solid base of middle class jobs that attract workers.

Read MoreFor home buyers, mortgage demand is locked at lows

College graduates and younger families have been clustering in coastal cities such as New York, San Francisco and Seattle, where incomes are generally ample and solid middle-class jobs plentiful. Yet studies and government data show that homes in these areas have become prohibitively expensive.

The result is that the dream of home ownership for many is proving frustrating, being deferred or abandoned, even for people with comfortable incomes.

Real estate home for sale housing price index home prices
Getty Images

"This great mismatch is hurting middle class people who would like to be homeowners," said Nela Richardson, chief economist at the real estate brokerage Redfin.

Roughly 40 percent of households in New York, San Francisco, Seattle, parts of Connecticut and Colorado, and Washington, D.C., earn more than $100,000 annually, compared with just 22 percent nationwide, according to the Census Bureau.

Areas that do offer inexpensive housing across the Midwest's industrial corridorAkron, Ohio, say, or Fort Wayne, Indianalack the same breadth of career possibilities.

This trend has likely helped hold back U.S. economic growth. Cities with the strongest job markets would grow even faster if more people could afford to live there, noted Jed Kolko, chief economist at the online real estate firm Trulia. The additional population would help spur further job growth, which, in turn, would strengthen the local economy and foster more middle-class jobs.

Two factors are getting in the way.

Tighter credit has made it harder to buy a home in the costliest areas with a down payment of under 10 percent.

Leading up to the recession, mortgages with no or low down payments reached destructive excesses. Yet first-time buyers who have stable incomes are struggling to afford homes without these options, noted Nela Richardson, chief economist at the real estate brokerage Redfin.

Second, construction is running well below its pace from a decade ago. The government reports that builders are on pace to construct 1.02 million homes this yearabout half the pace that prevailed in the early 1970s, when the oldest baby boomers were beginning careers.

Young adults continue to stream into many of the top job-generating areas despite the daunting housing costs. Nearly 52 percent of people who moved to the Bay Area over the past 12 months were millennials, according to Zillow. Similarly high percentages exist in New York City, Seattle, Denver and Washington.

Nationally, home prices are generally three times the size of annual incomes. Yet that ratio ranges from 3.5-to-1 in Washington to 7.1-to-1 in San Francisco. The challenge of shifting from rentals to ownership has become more problematic, particularly as younger workers look to marry and raise children.

'Golden Horseshoe' home builder plays
'Golden Horseshoe' home builder plays   

Affordable housing still exists, of course, in many areas. Millennials have the money to buy nearly 80 percent of homes available in Akron, Ohio, and Rochester, New York, according to Trulia. Several Texas cities, buoyed by the energy boom, offer both decent salaries and home ownership. But most affordable areas lack substantial job opportunities.

Based on income, a typical family buying in Fort Wayne, Indiana, can spend less than 10 percent of their income on monthly mortgage payments.

But at the same time, government figures show that Fort Wayne has roughly the same number of jobs now as before the recession began in 2007, meaning that bargain-priced homes haven't fueled a surge of job-seekers.

In the hottest job markets, buyers typically brace for bidding wars and settle for less than they hoped.

When Jen Ewing left New York City two years ago, she figured housing would be reasonable in Seattle, where her husband had taken a job as a manager with Expedia.

Read MoreHousing gets more affordable: Why aren't millennials buying?

"We thought we could get a beautiful four-bedroom house with a view," said Ewing, 38. "Then we got here, and that wasn't realistic at all."

They found a cute house on a quiet street and offered 10 percent above the asking price, only to learn that theirs was the lowest of six bids. For just under $500,000, they recently closed on a three-bedroom house a couple of blocks from a school for their two sons.

Unaffordable cities could relieve the price pressures by building more homes. A greater supply would cause prices to fall. But there are restrictions on construction.

Some are geographic: Manhattan is a slender island. Seattle borders Puget Sound. Others are regulatory: Boulder adopted a slow-growth policy in the 1970s. San Francisco has refrained from building upward in ways that could block views of the bay.

Read MoreWhere to put your cash? A house or a stock

Seattle real estate broker Tyler McKenzie expects the squeeze to tighten as companies in high-priced markets add jobs, saying Amazon's expansion is adding thousands of jobs to the city.

"We have as little (home) inventory as I've seen in my lifetime—and I'm over 50," McKenzie said.