It’s no secret that much of the nation’s housing market has recovered from the crash of 2007/08. In fact, home prices in many local markets have already exceeded their 2006 pre-crash levels with no sign of letting up.
The sizzling housing market is leaving many buyers out in the cold, especially first-time buyers and millennials with limited savings. It is estimated that, on average, housing prices are increasing at more than double the pace of average hourly earnings.
In fact, Zillow estimates that the median home price nationwide is expected to grow by $6,275 over the next year. As a result, the average American home buyer would need to save an additional $1,260 — or $105 per month — to account for a 20% down payment on a home purchase a year from now (See Chart 1). In high priced markets, the task of saving for a greater down payment is even more daunting. In San Jose, Calif., the median home value is expected to go up by nearly $36,000 in the next year. That means buyers would need to save an additional $599 per month to meet the increased down payment.
Additionally, the earnings needed to buy a home in many markets are significantly above and beyond what average workers earn, according to HSH. Nationally, an annual salary of $55,390 is required to buy a home at the average price of $254K (See Chart 2). In San Jose, where the average home price exceeds $1.1 million, the average annual salary required from a buyer is a whopping $216K.
Chart 1
| Metro Area | Extra Monthly Savings Needed for a Larger Down Payment |
| New York | $228 |
| Los Angeles | $125 |
| Chicago | $117 |
| Dallas-Ft. Worth | $165 |
| Philadelphia | $74 |
| Houston | $84 |
| Washington, D.C. | $154 |
| Miami-Ft. Lauderdale | $68 |
| Atlanta | $160 |
| Boston | $206 |
| San Francisco | $192 |
| Detroit | $87 |
| Riverside, Calif. | $266 |
| Phoenix | $113 |
| Seattle | $394 |
| Minneapolis-St. Paul, Minn. | $96 |
| San Diego | $267 |
| St. Louis | $55 |
| Tampa, Fla. | $106 |
| Baltimore | $127 |
Chart 2
| Metro Area | 30-Year Fixed Mortgage Rate | % Change from 2Q17 | Median Home Price | % Change from 2Q17 | Monthly Payment (PITI) | Salary Needed |
| National | 4.01% | -0.1% | $254,000 | -0.55% | $1,292.45 | $55,390.57 |
| Atlanta | 4.01% | -0.1% | $204,300 | -0.29% | $1,012.40 | $43,388.44 |
| Austin | 4.01% | -0.1% | $296,400 | -3.77% | $1,573.61 | $67,440.63 |
| Baltimore | 4.01% | -0.1% | $270,000 | -2.53% | $1,377.46 | $59,034.12 |
| Birmingham | 4.01% | -0.1% | $198,700 | -3.59% | $935.57 | $40,095.69 |
| Boston | 4.01% | -0.1% | $464,100 | -0.17% | $2,274.19 | $97,465.24 |
| Buffalo | 4.01% | -0.1% | $151,600 | +8.29% | $971.79 | $41,648.23 |
| Charlotte | 4.01% | -0.1% | $233,200 | -0.47% | $1,107.58 | $47,467.51 |
| Chicago | 4.01% | -0.1% | $255,600 | -3.29% | $1,463.73 | $62,731.35 |
| Cincinnati | 4.01% | -0.1% | $169,100 | +0.3% | $926.21 | $39,694.76 |
| Cleveland | 4.01% | -0.1% | $146,000 | +0.83% | $850.79 | $36,462.63 |
| Columbus | 4.01% | -0.1% | $193,900 | -1.92% | $1,041.04 | $44,616.20 |
| Dallas | 4.01% | -0.1% | $249,000 | -2.43% | $1,388.74 | $59,517.58 |
| Denver | 4.01% | -0.1% | $418,100 | -1.51% | $1,854.04 | $79,458.76 |
| Detroit | 4.01% | -0.1% | $183,040 | +1.96% | $987.68 | $42,329.29 |
| Hartford | 4.01% | -0.1% | $238,700 | -0.13% | $1,437.61 | $61,611.73 |
| Houston | 4.01% | -0.1% | $233,900 | -0.72% | $1,320.67 | $56,600.09 |
| Indianapolis | 4.01% | -0.1% | $173,700 | -1.42% | $855.63 | $36,670.05 |
| Jacksonville | 4.01% | -0.1% | $232,000 | -0.22% | $1,190.49 | $51,020.85 |
| Kansas City | 4.01% | -0.1% | $197,800 | -1.93% | $1,032.71 | $44,258.91 |
| Las Vegas | 4.01% | -0.1% | $261,600 | +3.6% | $1,183.67 | $50,728.93 |
| Los Angeles | 4.12% | -0.09% | $595,100 | +15.73% | $2,684.94 | $115,068.77 |
| Louisville | 4.01% | -0.1% | $175,700 | -0.57% | $885.27 | $37,940.17 |
| Memphis | 4.01% | -0.1% | $172,700 | +0.7% | $882.48 | $37,820.45 |
| Miami | 4.01% | -0.1% | $340,000 | +1.49% | $1,675.30 | $71,798.79 |
| Milwaukee | 4.01% | -0.1% | $246,900 | +0% | $1,328.30 | $56,927.00 |
| Minneapolis | 4.01% | -0.1% | $257,800 | -0.46% | $1,312.39 | $56,245.46 |
| Nashville | 4.01% | -0.1% | $234,300 | -5.71% | $1,106.78 | $47,433.50 |
| New Orleans | 4.01% | -0.1% | $204,300 | +1.14% | $1,029.73 | $44,131.30 |
| New York City | 4.01% | -0.1% | $419,100 | +1.23% | $2,313.53 | $99,151.22 |
| Oklahoma City | 4.01% | -0.1% | $158,800 | -0.87% | $870.49 | $37,306.76 |
| Orlando | 4.01% | -0.1% | $247,900 | +1.18% | $1,263.45 | $54,148.02 |
| Philadelphia | 4.01% | -0.1% | $238,900 | -0.08% | $1,311.20 | $56,194.50 |
| Phoenix | 4.01% | -0.1% | $248,900 | +0.65% | $1,129.94 | $48,426.19 |
| Pittsburgh | 4.01% | -0.1% | $146,000 | +0.69% | $821.46 | $35,205.49 |
| Portland | 4.01% | -0.1% | $389,400 | +0.08% | $1,793.96 | $76,883.89 |
| Providence | 4.01% | -0.1% | $287,000 | +2.35% | $1,560.99 | $66,899.42 |
| Raleigh | 4.01% | -0.1% | $267,500 | -3.88% | $1,263.32 | $54,142.27 |
| Richmond | 4.01% | -0.1% | $258,900 | +1.93% | $1,215.93 | $52,111.45 |
| Riverside/San Bernardino | 4.01% | -0.1% | $339,900 | -0.23% | $1,580.84 | $67,750.26 |
| Sacramento | 4.01% | -0.1% | $350,000 | +2.94% | $1,664.71 | $71,344.76 |
| Salt Lake City | 4.01% | -0.1% | $293,000 | -4.15% | $1,315.91 | $56,396.29 |
| San Antonio | 4.01% | -0.1% | $220,700 | -0.85% | $1,238.44 | $53,076.12 |
| San Diego | 4.12% | -0.09% | $607,000 | +0.33% | $2,709.47 | $116,119.96 |
| San Francisco | 4.12% | -0.09% | $900,000 | -5.26% | $3,997.72 | $171,330.88 |
| San Jose | 4.12% | -0.09% | $1,165,000 | -1.55% | $5,044.23 | $216,181.25 |
| Seattle | 4.01% | -0.1% | $478,500 | +0.65% | $2,179.75 | $93,418.01 |
| St Louis | 4.01% | -0.1% | $176,500 | +1.44% | $952.51 | $40,821.78 |
| Tampa | 4.01% | -0.1% | $225,000 | +2.18% | $1,154.39 | $49,473.67 |
| Virginia Beach | 4.01% | -0.1% | $224,000 | -6.63% | $1,110.64 | $47,599.08 |
| Washington, D.C. | 4.01% | -0.1% | $408,500 | -4.71% | $1,971.74 | $84,503.35 |