SEATTLE, Aug. 12, 2016 /PRNewswire/ -- Across the
country's largest rental markets, almost 14 percent of on-market
renters have strong credit scores, relatively high incomes and
could afford to buy the median home in their market.
As the homeownership rate has declined over the past decade, a
broader socio-economic swath of Americans are renting than at any
time in recent history. That means people who could afford to buy
are renting instead, increasing competition for limited available
homes for rent, according to an analysis of financial
qualifications reportedi via the Zillow® Renter Profile
feature.
San Jose, San Diego, and San
Francisco have the largest segments of on-market renters who
have the credit score and income necessary to purchase a home,
making those metros highly competitive for renters. Los Angeles, New
York and Seattle also made
the list of metros with large segments of current renters who are
financially qualified to buy a home.
To determine which markets have the highest number of
financially stable and thus most competitive renters vying for the
attention of landlords and property managers, Zillow examined the
self-reported credit scoresii and incomesiii
of renters who were on the market during the first half of 2016.
Zillow also looked at regional median rental and home values and
competition to determine the markets with the highest share of
renters who reported a monthly income equal to or greater than
necessary to afford the typical rental and median home in the metro
areaiv.
There are also long-term demographic trends impacting renter
qualifications and competition: young adults, both the affluent and
otherwise, are renting longer than ever before as they delay many
of the hallmarks of adulthood that typically lead to homeownership,
such as finishing their education and starting families.
In general, markets with lower homeownership rates have higher
proportions of on-market renters with both strong credit and high
incomes. That said, even when controlling for the homeownership
rate, booming markets closely associated with the tech industry –
such as San Jose and San Francisco – tend to have exceptionally
high proportions of highly qualified, on-market renters.
At the other extreme, markets that tend to have higher
homeownership rates, such as Houston, and metros that were particularly
hard hit during the housing bust and foreclosure crisis, including
Cleveland and Detroit, have lower shares of renters who
report both strong credit and high incomes.
"When faced with hurdles of high prices and low inventory,
first-time homebuyers are renting longer than ever before even if
they are qualified to buy," said Zillow Chief Economist Dr.
Svenja Gudell. "San Jose, San
Diego and Seattle are among
the most competitive places for buyers, and the going isn't any
easier for renters – as they are competing against throngs of
financially sound applicants with strong credit and high incomes.
This is a conundrum for many young people who move to those cities
because of their strong job markets, only to find tight inventory
and steep competition standing between them and their dream
home."
Renters can use Zillow's Renter Profile to create a personal
profile outlining their unique qualifications such as income,
credit score, and employment references. Renters create the profile
just once, and can share it quickly and easily with landlords and
property managers.
Markets with the
Highest
Share of Renters
Qualified to Buy
|
Ranking
|
Median Zillow
Home Value
Index (ZHVI)v
|
% of Renters
with Sufficient
Credit Score &
Income for
Median Home
(ZHVI)
|
% of Renters
with Sufficient
Credit Score &
Income for
Median Rental
(ZRI)
|
Homeownership
Rate in Metro
|
San Jose,
CA
|
1
|
$
957,900
|
35.6%
|
35.1%
|
56.3%
|
San Francisco,
CA
|
2
|
$
812,300
|
26.8%
|
26.2%
|
53.2%
|
San Diego,
CA
|
3
|
$
512,900
|
23.6%
|
23.4%
|
52.1%
|
Los Angeles,
CA
|
4
|
$
572,400
|
22.7%
|
22.6%
|
48.3%
|
Seattle,
WA
|
5
|
$
392,000
|
21.6%
|
21.3%
|
59.3%
|
New York,
NY
|
6
|
$
386,800
|
19.4%
|
19.1%
|
50.7%
|
Boston, MA
|
7
|
$
394,400
|
18.2%
|
17.5%
|
61.1%
|
Washington,
DC
|
8
|
$
368,700
|
17.4%
|
17.4%
|
62.6%
|
Portland,
OR
|
9
|
$
330,800
|
16.8%
|
16.7%
|
59.5%
|
Denver, CO
|
10
|
$
338,500
|
16.2%
|
16.0%
|
62.3%
|
Markets with the
Lowest
Share of Renters
Qualified to Buy
|
Ranking
|
Median Zillow
Home Value
Index (ZHVI)
|
% of Renters
with Sufficient
Credit Score &
Income for
Median Home
(ZHVI)
|
% of Renters
with Sufficient
Credit Score &
Income for
Median Rental
(ZRI)
|
Homeownership
Rate in Metro
|
Houston,
TX
|
1
|
$
172,900
|
6.8%
|
6.7%
|
59.0%
|
Indianapolis,
IN
|
2
|
$
130,200
|
7.2%
|
7.0%
|
64.5%
|
Cleveland,
OH
|
3
|
$
128,500
|
7.9%
|
7.7%
|
64.3%
|
Dallas-Fort Worth,
TX
|
4
|
$
189,500
|
8.2%
|
8.2%
|
59.1%
|
Kansas City,
MO
|
5
|
$
149,100
|
8.9%
|
8.9%
|
64.6%
|
Detroit,
MI
|
6
|
$
127,300
|
8.9%
|
8.9%
|
68.0%
|
Baltimore,
MD
|
7
|
$
251,400
|
8.9%
|
8.9%
|
65.5%
|
Atlanta,
GA
|
8
|
$
166,700
|
9.3%
|
9.2%
|
62.4%
|
Phoenix,
AZ
|
9
|
$
221,400
|
9.5%
|
9.4%
|
59.5%
|
Charlotte,
NC
|
10
|
$
162,300
|
9.8%
|
9.7%
|
61.3%
|
About 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 the best local professionals who can help. In
addition, Zillow operates an industry-leading economics and
analytics bureau led by Zillow'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. Zillow also sponsors the bi-annual Zillow Housing Confidence
Index (ZHCI) which measures consumer confidence in local housing
markets, both currently and over time. Launched in 2006, Zillow is
owned and operated by Zillow Group (NASDAQ:Z and ZG), and
headquartered in Seattle.
Zillow is a registered trademark of Zillow, Inc.
i On-market renters are actively searching for a
rental unit. The data does not necessarily reflect the full
spectrum of renters, only those who have created profiles on Zillow
through mid-2016, but is still likely capture an important segment
of the rental market.
ii Renters with a self-reported credit score of 700 or
higher were classified as financially strong rental applicants.
Renters with a self-reported credit score of 699 or less were
classified as financially weak rental applicants.
iii Renters with self-reported monthly income equal to
or greater than the monthly income necessary to afford the typical
rental in the metro area were classified as higher income renters.
Those reporting a monthly income below this amount were classified
lower income renters.
iv Zillow calculated the income necessary to afford the
typical rental or median home in the metro area using the Zillow
Home Value Index, Zillow Rent Index, and Zillow's Rent
Affordability data.
v Zillow Home Value Index (ZHVI) is the monthly median
home value in a particular geographical region, last updated in
Zillow's June 2016 analysis.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/many-big-city-renters-earn-enough-to-buy-300312831.html
SOURCE Zillow