More than Half of For-Sale Homes in Seven Major Markets are Currently Unaffordable for Typical Buyers Buyers in Southern Calif., Bay Area, Denver, Portland & Miami May Have Trouble Finding Affordable Homes, According to Zillow; More Communities Risk Becoming Unaffordable as Mortgage Rates Rise

- Home buyers making the median income in Los Angeles, San Francisco and San Jose are currently paying a larger share of their income toward a mortgage than during the pre-bubble years.

- At 5% mortgage interest rates, home buyers in San Diego, Riverside, Portland, Sacramento & Miami will also be paying more of their incomes to mortgages than they have historically.

Nationally, only one-third of homes currently for sale are unaffordable by historical standards.

SEATTLE, April 4, 2014 /PRNewswire/ -- More than half the homes currently on the market in seven major American metros are currently unaffordable for local residents, according to a Zillow® analysis of Q4 2013 income, mortgage and home value data. Additionally, homebuyers looking for affordable properties may increasingly be forced to search on the perimeter of the country's largest metro markets, as downtown properties become out of reach for buyers of typical means.

Zillow determined affordability by analyzing the current percentage of an area's median income needed to afford the monthly mortgage payment on a median-priced home[i], and comparing it to the share of income needed to afford a median-priced home in the pre-bubble years between 1985 and 2000. If the share of monthly income currently needed to afford the median-priced home is greater than it was during the pre-bubble years, that home is considered unaffordable for typical buyers.

Among the 35 largest metros nationwide, more than half of homes currently listed for sale[ii] in Miami (62.4 percent), Los Angeles (57.2 percent), San Diego (55.3 percent), San Francisco (55.2 percent), Denver (52.8 percent), San Jose (50.9 percent) and Portland, Ore. (50.3 percent) are unaffordable by historical standards.

Nationwide, just one-third of homes (33.6 percent) are currently unaffordable, and in many metro areas, the majority of homes remain more affordable now than they have been historically for buyers making the area's median income. But as mortgage interest rates rise along with home values, affordability will worsen, and buyers will need to spend ever-larger shares of their incomes to buy increasingly expensive homes.

Home buyers making the median income in Los Angeles, San Francisco and San Jose should already expect to pay a larger share of their income today toward a mortgage than during the pre-bubble years. Zillow expects mortgage rates on a 30-year, fixed-rate mortgage to reach or exceed 5 percent by the first quarter of 2015. Assuming rates at that level and another year of forecasted home value growth, home buyers in San Diego; Riverside, Calif.; Portland, Ore.; Sacramento; and Miami will also soon be paying a larger share of their incomes to their mortgage than they were during the pre-bubble years.

"As affordability worsens, we're already beginning to see more of the kinds of worrisome trends we saw en masse during the years leading up to the housing crash. These include a greater reliance on non-traditional home financing, smaller down payments and a greater pressure to move further away from urban job centers in order to find affordable housing options," said Zillow Chief Economist Dr. Stan Humphries. "We're not in a bubble yet, but we're beginning to see the early signs of one in some areas."

Metro Area

 Q4 2013

Median

Household

Income

 Zillow

Home

Value

Index (Q4

2013)

% of homes

currently on

the market

that are

unaffordable

by historic

standards

Current % of

monthly income

devoted to

mortgage

payments on

median-priced

home (Q4 2013)

Historic % of

monthly

income

devoted to

mortgage

payments on

median-priced

home (1985-

2000)

United States

$  52,830

$ 169,300

33.6%

15.1%

22.1%

New York, NY

$  68,716

$ 367,800

41.8%

25.3%

31.6%

Los Angeles, CA

$  59,712

$ 498,200

57.2%

39.6%

35.2%

Chicago, IL

$  61,434

$ 177,300

31.8%

13.7%

22.6%

Dallas, TX

$  60,140

$ 144,100

35.1%

11.3%

20.8%

Philadelphia, PA

$  63,918

$ 193,300

33.9%

14.3%

19.6%

Houston, TX

$  59,539

$ 143,800

44.5%

11.3%

17.0%

Washington, DC

$  91,689

$ 343,600

40.1%

17.8%

22.1%

Miami, FL

$  47,715

$ 184,600

62.4%

18.2%

20.7%

Atlanta, GA

$  57,797

$ 136,400

37.3%

11.1%

19.9%

Boston, MA

$  74,374

$ 350,100

40.1%

22.3%

27.8%

San Francisco, CA

$  77,184

$ 639,800

55.2%

39.3%

37.7%

Detroit, MI

$  52,623

$ 105,300

31.8%

9.5%

16.9%

Riverside, CA

$  53,645

$ 256,800

43.5%

22.6%

25.2%

Phoenix, AZ

$  53,556

$ 187,900

44.6%

16.6%

22.3%

Seattle, WA

$  67,944

$ 309,100

37.0%

21.5%

25.6%

Minneapolis, MN

$  69,050

$ 197,300

31.8%

13.6%

19.2%

San Diego, CA

$  63,404

$ 440,400

55.3%

32.8%

32.9%

St. Louis, MO

$  53,820

$ 131,500

30.0%

11.4%

17.0%

Tampa, FL

$  45,598

$ 134,400

41.1%

13.9%

18.9%

Baltimore, MD

$  70,708

$ 236,300

38.3%

15.8%

20.8%

Denver, CO

$  63,581

$ 243,200

52.8%

18.1%

21.6%

Pittsburgh, PA

$  50,985

$ 120,300

36.4%

11.1%

15.6%

Portland, OR

$  59,724

$ 259,100

50.3%

20.5%

22.7%

Sacramento, CA

$  58,789

$ 304,800

47.3%

24.5%

29.3%

San Antonio, TX

$  50,898

$ 147,200

33.5%

13.3%

22.7%

Orlando, FL

$  48,434

$ 153,000

41.3%

14.9%

20.8%

Cincinnati, OH

$  54,190

$ 131,400

24.3%

11.4%

19.4%

Cleveland, OH

$  49,243

$ 115,700

24.9%

11.2%

19.8%

Kansas City, MO

$  57,132

$ 139,600

25.3%

11.4%

18.3%

Las Vegas, NV

$  51,177

$ 167,600

31.9%

15.4%

24.1%

San Jose, CA

$  97,191

$ 743,500

50.9%

36.0%

34.9%

Columbus, OH

$  55,073

$ 136,400

24.5%

11.8%

20.0%

Charlotte, NC

$  54,583

$ 147,200

38.7%

12.7%

19.2%

Austin, TX

$  60,225

$ 200,700

37.8%

15.5%

24.3%

Virginia Beach, VA

$  51,985

$ 205,800

48.1%

18.7%

20.8%

About Zillow:
Zillow, Inc. (NASDAQ: Z) operates the largest home-related marketplaces on mobile and the Web, with a complementary portfolio of brands and products that help people find vital information about homes, and connect with the best local professionals. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Stan Humphries. Dr. Humphries and his team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. The Zillow, Inc. portfolio includes Zillow.com®, Zillow Mobile, Zillow Mortgage MarketplaceZillow Rentals, Zillow Digs®, Postlets®, Diverse Solutions®, Agentfolio®, Mortech®, HotPads™ and StreetEasy®. The company is headquartered in Seattle.

Zillow.com, Zillow, Postlets, Mortech, Diverse Solutions, StreetEasy, Agentfolio and Digs are registered trademarks of Zillow, Inc. HotPads is a trademark of Zillow, Inc.

[i] Assuming a 20 percent down payment and a 30-year, fixed rate mortgage at a prevailing rate of 4.3 percent, the average of October, November and December mortgage rate data from Freddie Mac's Primary Mortgage Market Survey.
[ii] According to an analysis of homes listed for sale on Zillow as of February 28, 2014. The count of for-sale listings includes only single-family homes, condos and cop-ops.

SOURCE Zillow, Inc.



RELATED LINKS
http://www.zillow.com

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.