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 $338,000 home, meaning they could buy about 68 percent of available homes, the report finds.
“Buying a home, especially for the first time, is a major step in a lot of people’s lives,” said Justin LaJoie, RealEstate.com general manager in a news release. “But with home prices climbing ever higher, and inventory yet to see sustained increases, getting a foot in the door is incredibly difficult for new buyers who can’t rely on selling another home to come up with a down payment.”
These are the markets where first-time buyers can afford the largest and smallest shares of listings:
|Largest Share of Listings Affordable||Smallest Share of Listings Affordable|
|Metropolitan Area||Share Affordable||Metropolitan Area||Share Affordable|
|1.||St. Louis, MO||83.7%||1.||Los Angeles, CA||25.4%|
|2.||Pittsburgh, PA||81.7%||2.||San Jose, CA||28.4%|
|3.||Hartford, CT||81.5%||3.||San Diego, CA||30.4%|
|4.||Buffalo, NY||80.7%||4.||San Francisco, CA||34.1%|
|5.||Oklahoma City, OK||79.7%||5.||Miami, FL||39.7%|
Zillow Group designed the RealEstate.com search experience to help first-time buyers trying to understand what they can afford with their monthly housing budget, it reports. Home shoppers can search RealEstate.com for homes based on the “All-In Monthly Price,” which lets people search based on their monthly budget and down payment savings amount. It includes mortgage payments, property taxes and utilities.
|Metropolitan Area|| Median First-
|United States||$ 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!