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After Mortgage Payment, Washington, D.C., Residents Have Greatest Remaining Income

Homeowners in Los Angeles and renters in the largest Florida metros have the least cash left over after paying for housing

-- Home ownership became less affordable across the country in 2018, but renting became marginally more affordable.

-- Among the largest U.S. metros, typical homeowners in Washington, D.C., have the greatest remaining income after paying their mortgages. Renters have the largest remaining incomes in San Jose, followed by Washington, D.C.

-- Residents of the Los Angeles metro and the three largest Florida metros have the least left over after paying for housing.

Mar 5, 2019

SEATTLE, March 5, 2019 /PRNewswire/ -- Amid worsening affordability in the U.S., people in the Washington, D.C., metro area have the most money left over after they pay their mortgage, according to a new Zillow® analysisi.

Assuming the median annual gross income and mortgage payment, homeowners in Washington, D.C., have almost $7,000 of their monthly income remaining after paying for their house, the most out of the 35 largest housing markets. The typical renter in Washington, D.C., has nearly $6,500 left over from their salary after their monthly rent payment, second only to San Jose at more than $6,800.

Residents of Los Angeles and Florida feel the pinch the most. Los Angeles homeowners have the least left over ($3,450) after paying their mortgage each month, followed by Miami, Tampa and Orlando. Renters in the three major Florida metros have the smallest pools of remaining spending money after they pay rent, with Los Angeles following just behind.

The outlook is even bleaker for those in Los Angeles when California's substantial income tax rates are considered. On top of housing costs, these taxes cut further into the income left over for variable cost-of-living expenses like transportation, child care and education.

"In our quest for happiness, or at least satisfaction, we must accept tradeoffs. A good-paying job with career growth potential often comes with expensive housing, leaving less for life's other essentials such as taxes, child care, transportation, medical services, food and leisure," said Skylar Olsen, Zillow Director of Economic Research. "Finding that balance where housing costs leave a comfortable amount of spending money is tricky, especially when the prices of life's non-housing essentials also vary widely by market." 

Overall affordability for home buyers worsened last year due to rising mortgage rates and continued strong home value appreciation throughout most of 2018. At its November peak, the average 30-year fixed rate in the U.S. had increased to 4.94 percent from 3.95 percent at the beginning of the yearii. However, mortgage rates have reversed course in recent weeks and dipped below 4.4 percent as future guidance has softened, while home value appreciation in the nation's biggest markets is cooling rapidly – a signal that mortgage affordability could improve in the coming months.

A mortgage payment on the typical home in the U.S. required 17.5 percent of the median income in Q4 2018. This is up from 15.4 percent in the last quarter of 2017 but still below the historic average of 21 percent from the late 1980s and 1990s. Using this traditional measure of housing affordability, less expensive Midwest markets such as Pittsburgh, St. Louis and Cincinnati top the list.

The typical U.S. renter spent 27.7 percent of their income on rent payments in 2018. This is down slightly from 28.1 percent in 2017, but higher than the historic average of 25.8 percent. Rent payments accounted for more than 30 percent of the median income in 13 large U.S. metros, widely considered the standard for unaffordable housing costs.

Metropolitan Area

Leftover Income
After Paying
Mortgage
(Annual)

Leftover
Income After
Paying Rent
(Annual)

% Income Spent
on Mortgage
Payments

% Income
Spent on Rent

United States

$52,231

$45,781

17.5%

27.7%

New York, NY

$57,749

$50,474

27.2%

36.4%

Los Angeles-Long Beach-
Anaheim, CA

$41,426

$39,926

43.7%

45.7%

Chicago, IL

$60,395

$51,417

15.5%

28.1%

Dallas-Fort Worth, TX

$58,484

$50,849

16.9%

27.7%

Philadelphia, PA

$60,116

$52,461

16.0%

26.7%

Houston, TX

$55,963

$47,200

15.3%

28.6%

Washington, DC

$83,642

$77,738

19.3%

25.0%

Miami-Fort Lauderdale, FL

$42,533

$33,783

24.7%

40.2%

Atlanta, GA

$57,289

$50,886

15.7%

25.2%

Boston, MA

$67,165

$61,467

25.4%

31.8%

San Francisco, CA

$60,039

$66,423

44.2%

38.3%

Detroit, MI

$53,114

$46,379

12.9%

24.0%

Riverside, CA

$47,244

$41,899

27.7%

35.8%

Phoenix, AZ

$51,643

$47,725

20.1%

26.2%

Seattle, WA

$61,931

$59,523

28.1%

30.9%

Minneapolis-St Paul, MN

$66,794

$59,810

16.5%

25.2%

San Diego, CA

$51,259

$49,293

36.4%

38.8%

St. Louis, MO

$56,030

$50,475

12.8%

21.5%

Tampa, FL

$43,549

$37,072

19.5%

31.4%

Baltimore, MD

$66,463

$58,730

16.6%

26.3%

Denver, CO

$60,569

$55,445

24.8%

31.1%

Pittsburgh, PA

$54,214

$48,172

11.6%

21.4%

Portland, OR

$56,286

$53,567

25.8%

29.4%

Charlotte, NC

$53,545

$47,810

15.9%

24.9%

Sacramento, CA

$50,872

$48,370

28.3%

31.9%

San Antonio, TX

$49,100

$42,372

16.2%

27.7%

Orlando, FL

$45,543

$39,225

20.3%

31.4%

Cincinnati, OH

$56,022

$48,762

12.9%

24.2%

Cleveland, OH

$47,058

$40,379

13.2%

25.5%

Kansas City, MO

$56,475

$50,462

14.3%

23.4%

Las Vegas, NV

$46,338

$43,788

22.9%

27.1%

Columbus, OH

$57,453

$50,568

14.0%

24.3%

Indianapolis, IN

$53,919

$47,300

13.0%

23.7%

San Jose, CA

$62,335

$81,880

49.9%

34.1%

Austin, TX

$61,660

$56,491

19.7%

26.5%

Zillow

Zillow is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Launched in 2006, Zillow is owned and operated by Zillow Group, Inc. (NASDAQ:Z and ZG), and headquartered in Seattle.

Zillow is a registered trademark of Zillow, Inc.

i For this analysis, Zillow subtracted the median mortgage or rent payment from the median income in a given metro

ii https://fred.stlouisfed.org/series/MORTGAGE30US

 

SOURCE Zillow, Inc.

For further information: Alex Lacter, Zillow, press@zillow.com


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