Buying a home is becoming the preserve of higher earners

by Steve Randall29 Jan 2019

The rise in home prices means that a larger percentage of homebuyers has at least 6-figure incomes.

A third of homebuyers in 2018 earned at least $100,000 according to a new analysis from Zillow; and while the long-established trend of homebuyers earning more than double the income of renters on average has remained fairly stable, other income groups are also being left behind.

This means that renters remain challenged when trying to save for a down payment but also current owners may also be challenged.

That’s because, in hot markets, sales prices have gained more since the financial crisis than home values, making it more expensive to be a homebuyer than to be a homeowner.

Meanwhile, household incomes have lagged home prices.

From 2012 to 2017 home values rose 36%, while incomes climbed just 11%. Zillow says this means there are now 3.5 million fewer households that can afford to buy the typical home.

During this period, the share of buyer households making more than $100,000 a year grew eight percentage points to 38%, while those making $50,000 or less fell eight percentage points to 28%. The share of buyers making $50,000 to $100,000 held steady during that time at 34%.

The typical home buyer household in 2017 earned more than 62.7% of all households, up from 59.8% in 2012.

“Home prices have outpaced incomes for nearly a decade, pushing homeownership further and further out of reach for first-time buyers even as homeownership aspirations remain very high," said Zillow senior economist Aaron Terrazas.

Median household incomes
According to data from the US Census Bureau shows that median incomes in 2018 were:

  • Home buyers: $79,900
  • Homeowners: $75,000
  • Overall: $60,000
  • Renters: $38,300

“If becoming a homeowner trends further toward the exclusive domain of society's most fortunate, wealth inequality could see an acceleration in the years ahead," added Terrazas.

Metropolitan Area

Buyers Making More
than $100,000 in 2012

Buyers Making More
than $100,000 in 2017

Median
Income of
Buyers

Median
Income of
Renters

United States

30%

38%

$79,900

$38,300

New York

53%

59%

$119,000

$47,800

Los Angeles

45%

56%

$111,603

$49,530

Chicago

40%

43%

$88,404

$40,000

Dallas-Fort Worth

38%

51%

$100,042

$45,000

Philadelphia

39%

49%

$98,000

$35,300

Houston

43%

47%

$92,815

$41,200

Washington, DC

56%

66%

$130,000

$64,000

Miami-Fort Lauderdale

26%

36%

$72,000

$39,000

Atlanta

36%

44%

$88,706

$43,000

Boston

60%

58%

$120,000

$46,600

San Francisco

62%

71%

$155,000

$73,163

Detroit

32%

34%

$75,986

$34,000

Riverside

31%

36%

$80,000

$41,500

Phoenix

29%

40%

$85,000

$42,000

Seattle

37%

56%

$113,877

$55,000

Minneapolis-St Paul

30%

47%

$94,170

$43,000

San Diego

40%

58%

$116,756

$53,000

St. Louis

26%

36%

$77,188

$35,000

Tampa

25%

31%

$66,437

$38,000

Baltimore

43%

48%

$95,112

$44,000

Denver

42%

52%

$100,288

$49,800

Pittsburgh

33%

31%

$65,843

$32,000

Portland

43%

52%

$103,000

$47,000

Charlotte

31%

37%

$75,000

$38,874

Sacramento

35%

48%

$96,244

$44,300

San Antonio

24%

45%

$88,000

$36,424

Orlando

28%

33%

$78,357

$40,000

Cincinnati

27%

39%

$81,488

$35,000

Cleveland

20%

33%

$68,405

$30,000

Kansas City

28%

39%

$82,042

$39,000

Las Vegas

27%

36%

$82,243

$41,718

Columbus

27%

40%

$88,000

$39,000

Indianapolis

30%

29%

$75,731

$35,200

San Jose

71%

79%

$191,603

$89,000

Austin

45%

49%

$98,250

$50,000

 


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