(Jeff Sorg, OnlineEd) – With prices rising and inventories falling, it’s now more affordable to buy a home in most US metro areas than it was 15 years ago, according to a report by Zillow analyzing third quarter income and home value data.
According to Zillow’s analysis of trends, on average, homeowners making the nation’s median income and purchasing the typical home spend 15.3 percent of their income on their monthly house payment, down from the historical norm of 22.1 percent during the pre-bubble period from 1985 to 1999. On average, U.S. renters spent 29.9 percent of their monthly income on rent in the third quarter of 2014, up from 24.9 percent historically.
“Despite rising home values, homeownership remains very accessible for buyers that can scrape together a down payment – even if that down payment is relatively modest – find a home to buy and secure financing,” said Zillow Chief Economist Dr. Stan Humphries. “But what keeps me up at night is the fact that it still remains so difficult for so many potential buyers to make those particular stars align, largely because renting is so unaffordable these days. It’s very difficult to come up with a down payment when so much of your monthly paycheck – especially on an entry-level salary – is going to your landlord instead of into your savings. Buying conditions are getting better every day, and in time the allure of fixed housing payments and building wealth through home equity will draw more buyers out of rentals and into homeownership.”
With affordable prices and new products like Fannie Mae’s 3% downpayment program for first time buyers, many experts expect that Millennials (aged 23-34) will overtake Generation X as the biggest group of U.S. homebuyers by the end of 2015.
Metro Area |
Q3 2014 Median Household Income |
Zillow Home Value Index (Q3 2014) |
% of monthly income devoted to mortgage payments (Q3 2014) |
% of monthly income devoted to mortgage payment for first-time homebuyers (Q3 2014) |
% of monthly income devoted to rent (Q3 2014) |
United States |
$ 53,620 |
$ 176,500 |
15.3% |
17.4% |
29.9% |
New York, NY |
$ 69,337 |
$ 381,600 |
25.6% |
30.6% |
40.5% |
Los Angeles, CA |
$ 60,650 |
$ 531,000 |
40.8% |
50.7% |
47.9% |
Chicago, IL |
$ 62,652 |
$ 188,200 |
14.0% |
16.2% |
31.5% |
Dallas, TX |
$ 61,310 |
$ 148,400 |
11.3% |
14.5% |
27.7% |
Philadelphia, PA |
$ 64,823 |
$ 202,700 |
14.6% |
18.1% |
28.8% |
Houston, TX |
$ 59,953 |
$ 150,300 |
11.7% |
15.0% |
29.4% |
Washington, DC |
$ 92,610 |
$ 359,300 |
18.1% |
24.0% |
27.1% |
Miami, FL |
$ 47,896 |
$ 205,200 |
19.9% |
21.2% |
44.5% |
Atlanta, GA |
$ 59,927 |
$ 151,900 |
11.8% |
15.2% |
24.1% |
Boston, MA |
$ 75,059 |
$ 362,700 |
22.5% |
26.3% |
34.1% |
San Francisco, CA |
$ 77,409 |
$ 689,900 |
41.5% |
43.3% |
45.9% |
Detroit, MI |
$ 52,694 |
$ 113,500 |
10.0% |
10.6% |
24.1% |
Riverside, CA |
$ 54,085 |
$ 277,900 |
23.9% |
28.8% |
36.4% |
Phoenix, AZ |
$ 53,487 |
$ 193,700 |
16.9% |
20.9% |
27.3% |
Seattle, WA |
$ 70,352 |
$ 333,700 |
22.1% |
27.3% |
30.8% |
Minneapolis, MN |
$ 69,569 |
$ 213,100 |
14.3% |
17.7% |
26.1% |
San Diego, CA |
$ 63,607 |
$ 466,100 |
34.1% |
42.9% |
42.5% |
St. Louis, MO |
$ 54,746 |
$ 129,100 |
11.0% |
12.5% |
24.1% |
Tampa, FL |
$ 46,050 |
$ 145,400 |
14.7% |
14.7% |
32.4% |
Baltimore, MD |
$ 72,010 |
$ 241,800 |
15.6% |
19.0% |
28.5% |
Denver, CO |
$ 64,120 |
$ 271,200 |
19.7% |
25.4% |
32.9% |
Pittsburgh, PA |
$ 51,668 |
$ 123,800 |
11.2% |
11.7% |
26.6% |
Portland, OR |
$ 60,071 |
$ 274,100 |
21.2% |
28.3% |
30.5% |
Sacramento, CA |
$ 59,161 |
$ 325,800 |
25.6% |
31.1% |
32.2% |
San Antonio, TX |
$ 51,884 |
$ 144,300 |
12.9% |
15.1% |
29.6% |
Orlando, FL |
$ 48,905 |
$ 168,100 |
16.0% |
19.7% |
32.1% |
Cincinnati, OH |
$ 55,093 |
$ 135,900 |
11.5% |
13.9% |
26.0% |
Cleveland, OH |
$ 49,842 |
$ 120,600 |
11.3% |
13.9% |
27.7% |
Kansas City, MO |
$ 58,212 |
$ 137,400 |
11.0% |
13.2% |
24.2% |
Las Vegas, NV |
$ 51,609 |
$ 181,600 |
16.4% |
19.3% |
27.5% |
San Jose, CA |
$ 99,230 |
$ 813,500 |
38.2% |
43.7% |
37.9% |
Columbus, OH |
$ 55,836 |
$ 144,300 |
12.0% |
14.1% |
27.0% |
Charlotte, NC |
$ 55,332 |
$ 155,900 |
13.1% |
15.3% |
26.3% |
Indianapolis, IN |
$ 55,238 |
$ 128,100 |
10.8% |
13.5% |
25.8% |
Source: Zillow
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This article was published on December 10, 2014. All information contained in this posting is deemed correct and current as of this date, but is not guaranteed by the author and may have been obtained by third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.