Zillow analysis shows expense for first-time buyers
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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 |
Buyers Making More |
Median |
Median |
|
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 |
