ZILLOW GROUP, INC. SEATTLE, Jan. 9, 2019 /PRNewswire/ -- Buying a home is one of the most expensive transactions most Americans will make in their life, and breaking into the housing market can be especially difficult for first-time buyers. A new RealEstate.com analysis finds that the typical first-time buyer earns more than the median household income, helping them afford to buy a home.
The median income for a first-time buyer is $72,500, compared with the national median household income of $60,700. The difference in income for first-time buyers is more pronounced when compared with their peers who didn't buy, who have a median income of $42,500, according to the 2018 Zillow® Group Report on Consumer Housing Trends.
Most buyers rely on savings to finance a down payment, but the second-highest source for a down payment comes from the proceeds from a previous home salei. Buyers entering the market for the first time don't have this resource, though, so a higher income helps them set aside enough for a down payment.
First-time home buyers tend to put down slightly smaller down payments, with a median down payment of 14.5 percent of a home's price, rather than the traditional 20 percent down payment. By comparison, 58 percent of repeat buyers put down at least 20 percentii. With this smaller down payment, first-time buyers earning the median income could afford to buy a $338,000 home, meaning they could buy about 68 percent of available homesiii.
"Buying a home, especially for the first time, is a major step in a lot of people's lives," said Justin LaJoie, RealEstate.com General Manager. "But with home prices climbing ever higher, and inventory yet to see sustained increases, getting a foot in the door is incredibly difficult for new buyers who can't rely on selling another home to come up with a down payment."
These are the markets where first-time buyers can afford the largest and smallest shares of listingsiv:
Largest Share of Listings Affordable | Smallest Share of Listings Affordable | ||||
Metropolitan Area | Share Affordable | Metropolitan Area | Share Affordable | ||
1. | St. Louis, MO | 83.7% | 1. | Los Angeles, CA | 25.4% |
2. | Pittsburgh, PA | 81.7% | 2. | San Jose, CA | 28.4% |
3. | Hartford, CT | 81.5% | 3. | San Diego, CA | 30.4% |
4. | Buffalo, NY | 80.7% | 4. | San Francisco, CA | 34.1% |
5. | Oklahoma City, OK | 79.7% | 5. | Miami, FL | 39.7% |
Zillow Group designed the RealEstate.com search experience to help first-time buyers trying to understand what they can afford with their monthly housing budget. Home shoppers can search RealEstate.com for homes based on the "All-In Monthly Price," which lets people search based on their monthly budget and down payment savings amount. It includes mortgage payments, property taxes and utilities.
Metropolitan Area | Median First- | Maximum | Share of |
United States | $ 72,500 | $ 338,100 | 67.7% |
New York/Northern New Jersey | $ 95,800 | $ 446,800 | 41.3% |
Los Angeles-Long Beach-Anaheim, CA | $ 90,000 | $ 419,600 | 25.4% |
Chicago, IL | $ 87,000 | $ 405,800 | 72.0% |
Dallas-Fort Worth, TX | $ 88,600 | $ 413,000 | 66.5% |
Philadelphia, PA | $ 88,000 | $ 410,300 | 76.6% |
Houston, TX | $ 84,900 | $ 396,000 | 70.1% |
Washington, DC | $ 132,500 | $ 617,800 | 72.2% |
Miami-Fort Lauderdale, FL | $ 70,700 | $ 329,800 | 39.7% |
Atlanta, GA | $ 86,700 | $ 404,500 | 70.7% |
Boston, MA | $ 109,900 | $ 512,500 | 52.0% |
San Francisco, CA | $ 133,200 | $ 621,100 | 34.1% |
Detroit, MI | $ 73,800 | $ 344,300 | 74.6% |
Riverside, CA | $ 79,100 | $ 368,800 | 57.1% |
Phoenix, AZ | $ 79,200 | $ 369,500 | 64.1% |
Seattle, WA | $ 107,900 | $ 503,100 | 47.6% |
Minneapolis-St Paul, MN | $ 96,500 | $ 450,200 | 73.3% |
San Diego, CA | $ 96,600 | $ 450,800 | 30.4% |
St. Louis, MO | $ 78,700 | $ 367,200 | 83.7% |
Tampa, FL | $ 70,700 | $ 329,800 | 69.3% |
Baltimore, MD | $ 107,100 | $ 499,300 | 77.6% |
Denver, CO | $ 98,400 | $ 458,800 | 51.4% |
Pittsburgh, PA | $ 75,100 | $ 350,400 | 81.7% |
Portland, OR | $ 94,100 | $ 438,700 | 48.8% |
Charlotte, NC | $ 83,600 | $ 390,000 | 71.8% |
Sacramento, CA | $ 87,200 | $ 406,800 | 45.7% |
San Antonio, TX | $ 77,700 | $ 362,200 | 73.4% |
Orlando, FL | $ 72,500 | $ 337,900 | 63.4% |
Cincinnati, OH | $ 79,500 | $ 370,600 | 78.1% |
Cleveland, OH | $ 68,500 | $ 319,300 | 79.2% |
Kansas City, MO | $ 81,000 | $ 377,600 | 72.4% |
Las Vegas, NV | $ 73,800 | $ 344,200 | 55.3% |
Columbus, OH | $ 79,400 | $ 370,300 | 71.2% |
Indianapolis, IN | $ 75,000 | $ 349,700 | 73.3% |
San Jose, CA | $ 150,900 | $ 704,000 | 28.4% |
Austin, TX | $ 99,200 | $ 462,600 | 75.2% |
Zillow Group
Zillow Group, Inc. (NASDAQ:Z) (NASDAQ:ZG) houses a portfolio of the largest real estate and home-related brands on mobile and the web, which focus on all stages of the home lifecycle: renting, buying, selling and financing. Zillow Group is committed to empowering consumers with unparalleled data, inspiration and knowledge around homes, and connecting them with great real estate professionals. The Zillow Group portfolio of consumer brands includes real estate and rental marketplaces Zillow®, Trulia®, StreetEasy®, HotPads®, Naked Apartments®, RealEstate.com and Out East®. In addition, Zillow Group provides a comprehensive suite of marketing software and technology solutions to help real estate professionals maximize business opportunities and connect with millions of consumers. Zillow Offers™ provides homeowners in some metropolitan areas with the opportunity to receive offers from Zillow. When Zillow buys a home, it will make necessary updates and list the home for resale on the open market. The company operates a number of business brands for real estate, rental and mortgage professionals, including Mortech®, dotloop®, Bridge Interactive® and New Home Feed®. The company is headquartered in Seattle.
Zillow, Mortech, Bridge Interactive, StreetEasy, HotPads, Out East and New Home Feed are registered trademarks of Zillow, Inc. Zillow Offers is a trademark of Zillow, Inc. Trulia is a registered trademark of Trulia, LLC. dotloop is a registered trademark of DotLoop, LLC. Naked Apartments is a registered trademark of Naked Apartments, LLC.
i https://www.zillow.com/research/down-payment-trends-22360/
ii https://www.zillow.com/report/2018/buyers/money-home-financing/
iii Assuming a 30-year fixed rate mortgage with a 5 percent rate
iv Among the 50 largest U.S. metros
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SOURCE Zillow Group
