Homebuyers’ incomes show price disparity

Nearly half of all Houston-area homebuyers in 2017 had annual income of more than $100,000, according to Zillow.

The 47 percent of buyers making more than $100,000 in 2017 was up from 43 percent in 2012.

The increase is a sign of how quickly home price appreciation has outpaced income growth. Home prices nationally rose 50 percent over the past seven years, according to a Zillow analysis, while incomes rose just 11.3 percent between 2012 and 2017, the last year for which data were available.

The real estate data and services firm found the median income of a Houston homebuyer in 2017 was twice that of the median renter’s income: $92,815 compared to $41,200.

“Home prices have outpaced incomes for nearly a decade, pushing homeownership further and further out of reach for firsttime buyers even as homeownership aspirations remain very high,” said Aaron Terrazas, Zillow senior economist, in a press statement.

“If becoming a homeowner trends further toward the exclusive domain of society’s most fortunate, wealth inequality could see an acceleration in the years ahead.”

Houston is not the only region where home prices are rising out of reach for a growing share of buyers.

Nationwide, the ratio of home value to income rose to 3.5 last year from 3 in 2011 to 3.5 in 2018 — meaning home prices have increased by half a year’s median income over the period.

The typical homebuyer today earns more than 62.7 percent of all U.S. households, up from 59.8 percent in 2012. And the majority of homebuyers in 11 of the 35 major cities tracked by Zillow, including Dallas, Denver, Portland, Ore. and San Diego, Calif., have six-figure salaries.

Terrazas said homes have been growing increasingly unaffordable for years, but various factors had allowed middle-income earners to find ways to buy.

“In the past, low interest rates, lax lending and migration from pricier to more affordable communities have helped square that circle,” Terrazas said of ways people managed to by homes despite increasing prices. “But those palliatives break down sooner or later.”