SEATTLE, July 10, 2019 /PRNewswire/ -- Households
including at least one person with a high school diploma or GED can
afford the typical mortgage payment in most large metro areas
across the U.S.i, according to a new analysis by
Zillow®. But soaring home values that have outpaced
incomes have made down payments a barrier for many, particularly
first-time home buyers.
Mortgage rates have dipped to multi-year lows in recent months,
meaning monthly payments are relatively affordable for buyers who
can secure a down payment. However, down payments are a challenge
to afford for many as prices have grown faster than incomes over
the past several years. A recent Zillow analysis found that buyers
need 1.5 years longer to save for a 20% down payment on the typical
home than 30 years prior, and the difference is much more extreme
in the most expensive metros – 13.3 years longer in San Jose, for example.
This effect is especially pronounced for first-time buyers who
do not have the equity of an existing home to put towards a down
payment on a new one. Zillow data shows that 46% of a typical down
payment comes from savings for first-time buyers, compared with 35%
for repeat buyersii.
"The influx of highly educated workers into already-expensive
metros with stagnant or slow-growing inventory has made it
difficult for those with less education and earning potential to
enter those markets," said Skylar
Olsen, director of economic research at Zillow. "There can
also be considerable variation within metros. While a bachelor's
degree may be enough to afford a mortgage on the typical home in
the San Diego metro at large, it's
likely to be insufficient in pricey areas like La Jolla. And that's only after scraping
together a sizable down payment, which is a huge hurdle for most
buyers."
For households that secure a down payment, the median mortgage
payments are affordable for those with a high school education in
36 of the 50 largest U.S. metros. The remaining 14 metros require
earnings associated with at least a two-year associate's
degree.
The median income of a university degree holder is necessary to
afford the median mortgage payment in the five most expensive West
Coast metros. A bachelor's degree is typically needed in
San Diego and Seattle, while the typical income of someone
with an advanced degree is required in San Jose, San
Francisco and Los Angeles.
The typical mortgage payment is affordable for those with
associate's degrees in Boston,
New York, Sacramento, Washington, D.C., Denver, Portland, Riverside, Salt Lake
City and Miami.
In only one metro, Oklahoma
City, can those with less than a high school degree usually
afford the typical mortgage payment. Households in Oklahoma City benefit from a combination of
low housing costs – only three of the 50 largest metros have a
lower median mortgage payment – and relatively high median incomes
for households in which nobody has a high school diploma.
Median rent was 27.8% of the typical U.S. household income in Q1
2019. This is up slightly from the previous quarter and just below
levels from a year earlier. Rent was most affordable for those in
Pittsburgh, where the median rent
is 21.4% of the typical household income. Los Angeles is the least affordable large
metro for renters – 46.1% of the typical income is required to pay
the median rent there.
Metropolitan
Area
|
Median Monthly
Mortgage Payment
– Q1 2019
|
Minimum
Education Needed
to Afford
|
% Income Spent
on
Median Mortgage
|
% Income Spent
on Median Rent
|
New York,
NY
|
$1,741.57
|
Associate's
Degree
|
26.1%
|
36.3%
|
Los Angeles-Long
Beach-Anaheim, CA
|
$2,569.80
|
Advanced
Degree
|
41.8%
|
46.1%
|
Chicago,
IL
|
$891.27
|
HS Diploma or
GED
|
14.9%
|
28.2%
|
Dallas-Fort Worth,
TX
|
$965.74
|
HS Diploma or
GED
|
16.4%
|
28.0%
|
Philadelphia,
PA
|
$922.80
|
HS Diploma or
GED
|
15.4%
|
26.8%
|
Houston,
TX
|
$814.05
|
HS Diploma or
GED
|
14.8%
|
28.7%
|
Washington,
DC
|
$1,608.79
|
Associate's
Degree
|
18.6%
|
25.1%
|
Miami-Fort
Lauderdale, FL
|
$1,122.56
|
Associate's
Degree
|
23.8%
|
40.7%
|
Atlanta,
GA
|
$866.84
|
HS Diploma or
GED
|
15.3%
|
25.5%
|
Boston, MA
|
$1,844.41
|
Associate's
Degree
|
24.4%
|
31.7%
|
San Francisco,
CA
|
$3,741.22
|
Advanced
Degree
|
41.6%
|
38.3%
|
Detroit,
MI
|
$639.10
|
HS Diploma or
GED
|
12.5%
|
24.0%
|
Riverside,
CA
|
$1,454.72
|
Associate's
Degree
|
26.6%
|
36.4%
|
Phoenix,
AZ
|
$1,050.06
|
HS Diploma or
GED
|
19.4%
|
26.7%
|
Seattle,
WA
|
$1,937.79
|
Bachelor's
Degree
|
26.9%
|
31.0%
|
Minneapolis-St
Paul,
MN
|
$1,065.04
|
HS Diploma or
GED
|
15.9%
|
25.4%
|
San Diego,
CA
|
$2,325.11
|
Bachelor's
Degree
|
34.5%
|
39.3%
|
St. Louis,
MO
|
$658.41
|
HS Diploma or
GED
|
12.2%
|
21.5%
|
Tampa, FL
|
$844.39
|
HS Diploma or
GED
|
18.7%
|
31.9%
|
Baltimore,
MD
|
$1,060.31
|
HS Diploma or
GED
|
15.9%
|
26.3%
|
Denver, CO
|
$1,607.60
|
Associate's
Degree
|
23.9%
|
31.3%
|
Pittsburgh,
PA
|
$568.97
|
HS Diploma or
GED
|
11.1%
|
21.4%
|
Portland,
OR
|
$1,567.81
|
Associate's
Degree
|
24.7%
|
29.5%
|
Charlotte,
NC
|
$821.93
|
HS Diploma or
GED
|
15.5%
|
25.2%
|
Sacramento,
CA
|
$1,623.76
|
Associate's
Degree
|
27.3%
|
32.2%
|
San Antonio,
TX
|
$766.37
|
HS Diploma or
GED
|
15.7%
|
28.0%
|
Orlando,
FL
|
$940.13
|
HS Diploma or
GED
|
19.7%
|
32.1%
|
Cincinnati,
OH
|
$673.38
|
HS Diploma or
GED
|
12.5%
|
24.2%
|
Cleveland,
OH
|
$578.82
|
HS Diploma or
GED
|
12.7%
|
25.6%
|
Kansas City,
MO
|
$762.82
|
HS Diploma or
GED
|
13.8%
|
23.4%
|
Las Vegas,
NV
|
$1,105.62
|
HS Diploma or
GED
|
22.0%
|
27.8%
|
Columbus,
OH
|
$758.88
|
HS Diploma or
GED
|
13.6%
|
24.4%
|
Indianapolis,
IN
|
$658.01
|
HS Diploma or
GED
|
12.7%
|
23.8%
|
San Jose,
CA
|
$4,766.46
|
Advanced
Degree
|
45.8%
|
34.2%
|
Austin, TX
|
$1,230.13
|
HS Diploma or
GED
|
19.2%
|
26.6%
|
Virginia Beach,
VA
|
$907.03
|
HS Diploma or
GED
|
16.3%
|
26.0%
|
Nashville,
TN
|
$1,010.27
|
HS Diploma or
GED
|
18.1%
|
27.3%
|
Providence,
RI
|
$1,162.75
|
HS Diploma or
GED
|
20.1%
|
29.3%
|
Milwaukee,
WI
|
$917.67
|
HS Diploma or
GED
|
17.7%
|
25.8%
|
Jacksonville,
FL
|
$845.96
|
HS Diploma or
GED
|
16.7%
|
27.5%
|
Memphis,
TN
|
$552.02
|
HS Diploma or
GED
|
12.5%
|
25.5%
|
Oklahoma City,
OK
|
$578.42
|
No HS
Diploma
|
11.8%
|
22.5%
|
Louisville-Jefferson
County, KY
|
$638.71
|
HS Diploma or
GED
|
12.8%
|
24.0%
|
Hartford,
CT
|
$905.46
|
HS Diploma or
GED
|
14.6%
|
25.9%
|
Richmond,
VA
|
$905.85
|
HS Diploma or
GED
|
15.4%
|
24.2%
|
New Orleans,
LA
|
$688.75
|
HS Diploma or
GED
|
15.8%
|
32.7%
|
Buffalo,
NY
|
$630.83
|
HS Diploma or
GED
|
12.9%
|
25.0%
|
Raleigh,
NC
|
$1,049.28
|
HS Diploma or
GED
|
16.7%
|
23.2%
|
Birmingham,
AL
|
$575.66
|
HS Diploma or
GED
|
12.6%
|
24.1%
|
Salt Lake City,
UT
|
$1,436.99
|
Associate's
Degree
|
22.9%
|
25.8%
|
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, data analysts, applied scientists and engineers 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 Mortgage payments were considered affordable if the
median mortgage payment in a given metro was no more than 30% of
the median household income for a given level of education in that
metro. This analysis cites household incomes from the 2017 American
Community Survey, inflation-adjusted to 2019
dollars.
ii 2018 Zillow Group Consumer Housing Trends Report
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content:http://www.prnewswire.com/news-releases/mortgage-payment-within-reach-for-high-school-grads-in-most-cities-300882238.html
SOURCE Zillow