Did your house earn more than you did in 2021?
In the Washington area, the answer for most of us probably is “no” – although in the rest of the country, it in many cases may be “yes.”
That’s the conclusion of the numbers-crunchers at Zillow, who compared the average home-value growth in major metropolitan areas with the median pre-tax income for individuals, both for calendar-year 2021.
Nationally, the typical U.S. home saw an increase in value of $52,667 last year, compared to a median income of $50,000. (In most instances, it’s worth keeping in mind that average income tends to be higher than median income, but we digress …)
In the D.C. region, the value of an average home grew by $56,163 over the year, while median income was $75,000. That makes the D.C. region one of a minority of metro areas in the survey to see household income above home-value growth for the year.
Home-value appreciation in 2021 was higher than median incomes in 25 of 38 major metropolitan areas studied by Zillow, with appreciation reaching higher than $100,000 in 11 of them. San Jose had the highest median income at $93,000, and it also led all major metros in annual home value appreciation – with the typical home there growing a whopping $229,277 over 2021.
“More than anything, 2021 was a year of haves and have-nots, and the chasm between the two widening throughout,” said Zillow economist Nicole Bachaud. “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.”
Expensive coastal markets in California and Hawaii saw home-value growth wallop local median incomes by the largest amounts. San Jose led but San Francisco closely followed, with homes earning $129,914 more than the median salary. Boise, Salt Lake City, Seattle and Phoenix were also in the top 10.
Metropolitan areas with the lowest home-price appreciation relative to median incomes were Detroit, St. Louis and Baltimore, though even the smallest home-value growth among these metros, in St. Louis, was still more than $27,000.
While homeowners watched their assets multiply in 2021, the chasm separating many renters from home-ownership widened, as home prices skyrocketed and rising rents eroded their ability to save for a down payment.
Rents rose 16 percent across the U.S. in 2021 and upward of 25 percent in popular Sun Belt locales like Miami, Phoenix and Las Vegas. Locking in a one-year lease on a typical U.S. rental cost $3,072 more at the end of the year than the start of the year. It was $7,104 more in Miami, $4,644 more in Phoenix and $4,380 more in Las Vegas – major hits to a household budget, as that money can’t be saved toward a down payment.
At the same time, down payments – often the highest hurdle to homeownership for first-time buyers – rose by more than $10,000 in 2021 for a typical 30-year fixed mortgage. Sticking with metros used in the rent comparison, typical down payments rose nearly $14,500 in Miami, more than $20,600 in Phoenix and $16,700 in Las Vegas.
• • •
Coming later this month is the Sun Gazette’s Spring Real Estate Guide: Watch for it so you can stay in touch with the full scope of the local, regional, statewide and national real-estate market!