Skyrocketing home valuations exceeded the median income in a majority of American cities, according to a new report from Zillow.
Your home probably earned more than you did last year.
That’s according to a March 18 report by Zillow that found skyrocketing home valuations exceeded the median income in a majority of American cities, as homes become more and more expensive across the country.
Home value growth was higher than the median income workers in 25 of the 38 metropolitan areas studied, Zillow said, illustrating the unprecedented home price growth seen throughout 2021, and the expanding barriers to entry many would-be homebuyers are facing.
Eleven of the 38 cities studied by Zillow saw home valuations increase by $100,000 in 2021. In San Jose, where researchers found the highest median salaries, wage earners were still beat out average home valuation, which increased by $229,277 on average in 2021 — approximately the average salary for an oral surgeon, the study points out.
Already expensive coastal California cities saw home valuations beat out average salaries by the highest amounts, the study found. San Francisco followed San Jose, where homes earned an average of $129,914 more than the average salary. Honolulu, Hawaii, saw home values increase by $138,254 while average median income sits at just $51,000.
At the same time, rents are shooting upwards, further burdening those who are being cut out of homeownership. Rents rose 16 percent nationally, Zillow found, while newly popular sun belt cities saw the price of a one year lease shoot up especially high. In Las Vegas, leases increased by an average of $4,380, while Miami saw an increase of $4,644, and Phoenix saw prices increase by $4,380 on average.
While home valuations and rents increase aggressively, down payments — often the largest barrier to entry for homeownership — are increasing with them. The study found that in the same three cities, average down payments were going through the roof, increasing on average by $14,500 in Miami, more than $20,600 in Phoenix, and $16,700 in Las Vegas.
“More than anything, 2021 was a year of haves and have-nots, and the chasm between the two widening throughout,” Zillow economist Nicole Bachaud said in a statement. “Those who owned a home saw their household wealth increase dramatically. But many renters witnessed that dream either soar out of reach or had to drastically adjust their expectations and plans.”