- If you are a homeowner, how much money did your home ‘make’ compared to you last year? To answer this question, we analyzed single-family home sale price changes and local individual earnings in the 50 largest U.S. metros and ranked them according to how much home price gains represent as a percentage of yearly incomes.
- The three cities where homes ‘earned’ the most compared to owners’ local incomes were Salt Lake City, Los Angeles and Inland Empire. Here, the home price net increases represent 50% or more of their owners’ median yearly earnings. Eight more metros are in the high performers’ category due to their home price increases accounting for 40%, and up to 49% of median earnings: Las Vegas, Seattle, Phoenix, Providence, Milwaukee, Charlotte, Hampton Roads, and Philadelphia.
- There were 29 medium performing markets, where home price gains in 2019 represent between 20% and 39% of individual local earnings.
- Toward the other end of the ranking, ten lower-performing markets have seen net home price growth that only accounts for less than 20% of owners’ yearly individual earnings. Also, three metros experienced home price drops over the year (San Jose, Jacksonville and Oklahoma City), and San Jose leads the way with the biggest net home price drop, -$75,000.
- Of the top ten wealthiest metros, or areas boasting the highest median incomes, Seattle stands out with a net home price increase that represents 47% of median earnings, followed by Minneapolis-Saint Paul (34%) and Washington, D.C.(32%). Homes in the Bay Area, however, did the opposite: home sale prices in San Jose, which were probably due for a correction, decreased with -$75,000, while San Francisco home prices stagnated, ‘earning’ their owners extremely little over the year.
- The gender pay gap becomes a very interesting, if skewed lens that warps home equity perceptions. When translating home price increases into percentage of earnings, for example, in Salt Lake City the yearly home price gains represent only 53% of the earnings of salaried male owners, but 77% of the median yearly earnings of female owners across the metro area.
Visual map 3D – all 50 metros
If you worked hard to own a home, wouldn’t it be good if your home started working for you? With most of the news and reports focusing on homebuyers, we wanted to shift the focus on homeowners and see how they are faring in today’s volatile market.
Given that home value appreciation has been picking up speed, with homes in some metros across the U.S. ‘earning’ close to what their owners make in a year, it seems owning a home is one of the best investment options and long-term financial decisions people can make. In certain cities, owning a home adds a significant, albeit only potential, amount of cash to people’s yearly earnings. In fact, in three of the 50 largest U.S. metros, the median home price grew with over $20,000 in just one year, and cities in three other metro areas have seen such massive home price gains that those amounts alone represent over 50% of the local yearly median income.
To discover the cities where owning a home brings the most value and to see exactly how home price gains stack up as a percentage of personal yearly incomes, we analyzed single-family home price growth, from December 2018 until December 2019, and median earnings in America’s 50 largest metros, looking at how much net value homes acquired in a year, and compared that amount to local yearly earnings. We also looked at earnings based on gender, trying to determine how the different male and female yearly incomes impact our perception on home equity.
Perfect Storm: Lower Median Earnings and Fast-Increasing Home Prices Put Salt Lake and SoCal in the Lead among High-Performing Markets
According to our analysis, home prices in the U.S. went up 5% from December 2018 until December 2019, from a median sale price of $261,600 to $274,600. The $13,000 net jump represents 35% of the median annual wage, which was $37,020 in 2019.
However, homeowners in three U.S. metros have seen much more significant home price increases as percentage of yearly earnings, making these markets top performers in this respect. Home prices in Salt Lake City, Los Angeles and Inland Empire “earned” over 50% of their owners’ income in a year, with Salt Lake City leading the way: here, home prices rose 7% from December 2018 until December 2019, or $23,500, which represents an impressive 62% of the median Salt Lake City income of $37,853.
SoCal takes the second and third spots. In Metro Los Angeles, one year of home price gains represents 58% of the residents’ median earnings, while homeowners in the Inland Empire saw the third most impressive home price gain as a percentage of earnings: 55%. Homes in Los Angeles “earned”, on average, $20,400, while in the Inland Empire, home values went up by $18,500 last year alone. Depending on the amount spent on taxes and home maintenance expenses, homeowners in these metros have the best chances of really making their homes work for them.
Next in line are eight more top-performing metros, where home price gains represent between 40% and 49% of individual yearly earnings: Las Vegas, Seattle, Phoenix, Providence, Milwaukee, Charlotte, Hampton Roads, and Philadelphia. Seattle stands out with a net home price gain of $23,300, the second-highest net increase after Salt Lake City. However, it missed the podium because median earnings here ($49,153) are the fourth largest of all the metros we analyzed, meaning home price gains translate into a percentage of individual salary under 50%.
Homes in Medium-Performing Markets Still ‘Earned’ a Large Chunk of What Their Owners Made in 2019
Twenty metro areas have seen home price gains which account for 30% to 39% of local earnings. Of these, Washington, D.C. leads the way with the biggest home price net gain, $16,900 in a year, followed by metros Minneapolis-Saint Paul and Sacramento, where home price gains are hovering around $15,000.
Nine metros experienced smaller home price increases, accounting for 20% to 29% of the local yearly individual earnings. Central Maryland, Denver and San Diego were on the higher end of this cohort, with net home price appreciation values well over $10,000, while Tampa Bay Area, Cleveland and St. Louis have seen home price increases of $10,000 or just a little over that.
Low-Performing Markets: Stagnating Home Prices Means San Francisco Homes Didn’t ‘Earn’ Much at all & Home Prices in Three Other Metros Depreciated
Toward the other end of the scale, there are several metros where homeowners have noted more modest home price appreciation rates, with one metro seeing home prices virtually stagnating, and three more noting quite significant decreases.
The metro where homes didn’t ‘earn’ almost anything last year is San Francisco. The $500 (0.1%) increase in home sale price in the area translates into approximately 1% of the local individual income ($56,766). The only other market where home price gains represent less than 10% of local individual income is located on the other coast: in Hartford, the $2,300 net price gain accounts for 5% of yearly earnings.
Three of the 50 biggest metros have actually recorded home price drops, with San Jose being the ultimate outlier: here, home prices decreased 6%, or $75,000. Despite this, homes in this metro remain the most expensive of all the areas included in the analysis, with a median sale price of $1,265,000, which is far more expensive than, and cannot be compared to even the second-priciest market in the analysis, San Francisco.
The other two metro areas where home prices dropped are Jacksonville and Oklahoma City. Homeowners in these two metros not only didn’t see their home value go up, but actually experienced negative equity.
Of the Ten Highest-Income Metro Areas, Bay Area’s San Jose and San Francisco, along with Seattle Are the Extremes
If San Francisco’s home sale prices didn’t really budge last year, leaving the metro in a lonely club of one, the same cannot be said about San Jose and Seattle. These two metros are at the extremes of the ranking: San Jose is the only wealthy metro, and one of only three of the 50 metros included in the analysis to experience sale price decreases.
In the case of San Jose, given that it boasts the most expensive homes in the analysis, the drop in home sale price might be interpreted as a correction. The 5.6% decrease in home sale prices translates into a $75,000 net drop accounting for -128% of local earnings, which means homes in this Bay Area metro didn’t add to homeowners’ yearly earnings.
Seattle, on the other hand, saw the second-biggest home sale price increase of all 50 metros, and the biggest one of the ten wealthiest metros in the analysis, accounting for 47% of local individual earnings.
What Does the Gender Pay Gap Mean for Male and Female Homeowners?
While looking at the data, we noticed some big discrepancies between male and female homeowners in terms of both wages (probably still unsurprisingly) and, therefore, how much home price increases represent of their yearly earnings. Given that the pay gap remains as jarring as ever in many regions, median earnings differ widely for male and female earners, leading to a rather significant difference in how home equity may be perceived.
For example, in Salt Lake City, median earnings in 2019 were $37,853, which means that the $23,500 home price gain recorded in 2019 translates to a share of 62% of the median local income. However, when analyzing median earnings of male and female employees, home price gain as share of income appears in a different light: for male homeowners, the $23,500 increase in home prices represents 53% of yearly earnings, while for female homeowners, the price change translates to a share of 77% of the yearly individual income.
The only metro where home price gains represent equal percentages of both male and female earnings is San Francisco. However, this is not due to similar median incomes, but to the fact that home prices here stagnated in 2019, so there is no home price appreciation to speak of. Two metros where home price increases represent an almost equal share of men and women’s yearly salaries are Hartford and Richmond. In Hartford, home price gains represent 4% and 6% of men’s and women’s salaries respectively, whereas in Richmond, the increase accounts for 12% of men’s yearly earnings and 15% of women’s earnings.
Home price growth outpacing income growth has been a reality for some time now. But this can translate into substantial home equity ‘earnings’, meaning that owning a home could significantly improve homeowners’ bottom line.
Median single-family home prices for 2018 and 2019 were sourced from the National Association of Realtors, more precisely from the Median Sales Price of Existing Single-Family Homes for Metropolitan Areas. At metro level, we only had available sale price data broken down by category (single-family homes and condos) and we chose the single-family category.
Individual median earnings for 2018 were calculated based on data from the U.S. Census (2018, 1-year estimates), with a yearly indexation of 4.9%, per TradingEconomics (calculated as an average of all values available 2019-2020).
The share of home price growth from individual yearly income was calculated by dividing the difference between home prices in 2019 and 2018 to the local yearly income. The cities were ranked from the highest percentage of home price growth from individual income to the lowest.
Fair use and redistribution
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