By Nathalie Voit
Home price growth outpaced median salaries in 25 of 38 U.S. metro areas last year, according to a new report from Zillow released on March 18.
In comparison, just five U.S. cities experienced home value appreciation surpass median income in 2020, the real estate firm said.
The massive real estate gains placed homeowners in a financially lucrative position. However, those gains were not replicable for renters or would-be-homeowners, who saw their dreams of owning a home grow increasingly out of reach.
“2021 was a year of haves and have-nots, and the chasm between the two widening throughout,” Zillow said. “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.”
Coastal markets in Hawaii and California saw the greatest difference between home value growth and average income. San Jose topped the list as the city with the highest increase in annual home value appreciation. Although the city’s median income is $93,000, the typical home saw its value appreciate by a whopping $229,277 over 2021, nearly equivalent to what oral surgeons make. San Francisco followed suit, with home prices growing by almost $130,000 more than the median salary, Zillow said.
Home prices grew by more than $100,000 in 11 major U.S. metro areas, including Boise, Salt Lake City, Seattle, and Phoenix. In contrast, Detroit, St. Louis, and Baltimore were the cities with the lowest home price appreciation relative to average salary.
Median rent across the country also skyrocketed, eroding many first-time buyers’ ability to save for homeownership. Annual rent payments in the U.S. rose over $3,000 in 2021, or 16%, with places like Miami, Phoenix, and Las Vegas reporting rent price growth of $7,104, $4,644, and $4,380, respectively.
Additionally, the average down payment on a new home surged by more than $10,000 over the year, with down payments in Miami rising by nearly $14,500, over $20,600 in Phoenix, and $16,700 in Las Vegas, according to the report.
“The term “household income” was given new meaning in 2021 as a banner year for home appreciation found houses themselves earning more than the median worker in major metros across the country,” Zillow said in the release.
