More Than a Third of Home Buyers Now Make More Than $100,000

About 3.5 million fewer households can afford a typical home than could in 2012, as home buyer incomes have pulled ahead of homeowner incomes, and remain more than double that of renters.

News provided by

Zillow, Inc.

Jan 29, 2019, 08:00 ET

SEATTLE, Jan. 29, 2019 /PRNewswire/ -- Home buyers have long earned more than twice as much money, on average, as renters -- a gap that's remained relatively stable for more than a decade. But a new Zillow® analysis shows buyers are beginning to distance themselves from other income groups, highlighting how expensive it is for first-time buyers especially to break into the housing market.

Not only is that a problem for renters trying to save for a down payment as home values continue to outpace incomes, but it also portends greater long-term impacts on wealth inequality.

From 2012 to 2017 home values rose 36 percent, while incomes climbed just 11 percent. The effect of that is there are now 3.5 million fewer households that can afford to buy the typical home, a Zillow analysis shows. The typical home buyer household in 2017 earned more than 62.7 percent of all households, up from 59.8 percent in 2012.

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

Home buyers and homeowners, who historically had similar incomes, are seeing a widening gap as buyers pulled ahead during the recovery from the Great Recession. That's largely because sales prices outpaced home values in many hot markets, meaning it takes more money to be a home buyer than to be a homeowner.

The breakdown of median household incomes in the U.S. now looks like thisⁱⁱ:

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

There are several reasons why renter households historically earn about half as much as buyers. Buying a home comes with large upfront expense, such as the down payment and closing costs. Higher-earning households are most likely to save up that down payment and buy, moving from the renter group to home buyers. Renters also are more likely to be younger and single-income households.

Almost half of renters who moved in the past year (46 percent) considered buying a home instead during their search, but ultimately ended up renting. A third of renters (32 percent) say they will continue renting because they are saving for a down payment, according to the latest Zillow Group Consumer Housing Trends Report. Adding to the difficulty of saving is the continual climb of home prices, especially in the most-affordable segment of the market. More than two-thirds of buyers use at least some savings for their down payment, and nearly a quarter of buyers put down five percent or less.

"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. "In the past, low interest rates, lax lending, and migration from pricier to more affordable communities have helped square that circle – but those palliatives break down sooner or later. 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."

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

Zillow
Zillow is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with great real estate professionals. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow Group's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her 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. Launched in 2006, Zillow is owned and operated by Zillow Group, Inc. (NASDAQ:Z and ZG), and headquartered in Seattle.

Zillow is a registered trademark of Zillow, Inc.

ⁱ All income figures are inflation adjusted to 2017 dollars.

ⁱⁱ Renters are defined as households that rent their home. Buyers are defined as households that own their home and moved in the past 12 months. Homeowners are households who own their home and have not moved in the past 12 months. Income data are from U.S. Census Bureau American Community Survey (ACS), 2005-2017.

SOURCE Zillow, Inc.