Purchasing a home is considered to be one of the most expensive transactions most Americans will make in their life, and breaking into the housing market can be very difficult for first-time buyers.
However, a new RealEstate.com analysis finds 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 sale. 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, according to the report.
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 percent. 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 homes, the report finds.
“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 in a news release. “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 listings:
| 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, it reports. 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- time Buyer Income |
Maximum Price Affordable to Median First- time Buyer |
Share of Homes Affordable to Median First- time Buyer |
| 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% |
Even if you are a first-buyer don’t despair there’s a home out there for you and your family just waiting for you to move in!
