Owners of starter homes across the country gain equity faster
Owners of starter homes across the country are gaining equity faster than other homeowners because demand for entry-level homes continues to grow faster than supply.
The phenomenon – which has become more pronounced over the past few years — underscores the power of homeownership to build wealth, particularly among the middle class.
For this analysis, Zillow® divided the U.S. housing stock into equal thirds based on value and determined the median value of the most and least valuable homes. Over the past year, homes in the most affordable segment of the market, which are often sought after by first-time buyers, gained 8.5 percent in value, compared to a 3.6 percent gain for the most expensive homes. Over the past five years, the difference is even more noticeable — people who own starter homes have seen their equity grow by 44.4 percent, while owners of top-tier homes have gained 26.6 percent.
A home is the biggest financial asset and a significant share of net worth for many homeowners. Less affluent homeowners typically have more of their wealth in their homes than homeowners with a higher net worthi. Owners of more affordable homes are seeing their homes’ value, and therefore their overall wealth, grow rapidly.
Strong home value appreciation among more affordable homes is beneficial for people who own those homes, but also makes it difficult for buyers trying to enter the market. Inventory among the most affordable homes is extremely limited, making for a highly competitive market going into home shopping season — there are nearly 18 percent fewer entry-level homes available now than a year ago.
Among the largest U.S. housing markets, owners of the cheapest homes in Tampa, Florida are seeing the greatest gains in home equity. Over the past year, these homes have gained 20.4 percent in value. Las Vegas homeowners are close behind. The most affordable homes there have appreciated 19.9 percent from last year.
San Francisco, Seattle and San Jose, California are the only large markets where the most expensive homes are gaining value faster than starter homes.
|
Metropolitan Area |
Bottom |
1-Year |
5-Year |
Top Tier |
1-Year |
5-Year |
|
United States |
$120,100 |
8.5% |
44.4% |
$363,000 |
3.6% |
26.6% |
|
New York, NY |
$260,200 |
8.5% |
24.1% |
$790,600 |
5.7% |
29.2% |
|
Los Angeles-Long Beach-Anaheim, CA |
$436,700 |
9.0% |
66.2% |
$1,062,000 |
7.8% |
44.7% |
|
Chicago, IL |
$122,100 |
5.0% |
31.6% |
$373,400 |
1.3% |
19.6% |
|
Dallas-Fort Worth, TX |
$132,100 |
10.5% |
78.8% |
$391,100 |
5.4% |
46.5% |
|
Philadelphia, PA |
$117,800 |
5.2% |
16.7% |
$388,900 |
3.0% |
16.1% |
|
Houston, TX |
$125,300 |
12.7% |
71.4% |
$331,200 |
2.6% |
28.3% |
|
Washington, DC |
$238,700 |
3.1% |
34.1% |
$666,600 |
-0.1% |
13.9% |
|
Miami-Fort Lauderdale, FL |
$138,100 |
10.1% |
102.2% |
$463,000 |
2.1% |
39.2% |
|
Atlanta, GA |
$107,300 |
12.8% |
77.9% |
$366,500 |
4.0% |
41.1% |
|
Boston, MA |
$283,400 |
8.5% |
41.5% |
$732,600 |
5.2% |
33.9% |
|
San Francisco, CA |
$530,900 |
9.5% |
103.3% |
$1,559,400 |
11.6% |
70.4% |
|
Detroit, MI |
$53,700 |
17.2% |
46.3% |
$286,600 |
4.0% |
41.3% |
|
Riverside, CA |
$226,900 |
9.7% |
87.2% |
$498,500 |
6.9% |
46.8% |
|
Phoenix, AZ |
$166,900 |
9.8% |
85.4% |
$410,200 |
4.7% |
30.5% |
|
Seattle, WA |
$298,300 |
12.1% |
79.7% |
$832,900 |
13.5% |
67.9% |
|
Minneapolis-St Paul, MN |
$171,700 |
6.2% |
48.0% |
$391,800 |
3.0% |
26.4% |
|
San Diego, CA |
$416,300 |
7.7% |
64.6% |
$876,700 |
6.9% |
37.8% |
|
St. Louis, MO |
$77,400 |
6.5% |
20.0% |
$280,400 |
-1.8% |
17.4% |
|
Tampa, FL |
$110,500 |
20.4% |
95.2% |
$337,400 |
1.5% |
43.1% |
|
Baltimore, MD |
$138,700 |
3.8% |
13.9% |
$452,100 |
-0.3% |
10.8% |
|
Denver, CO |
$267,600 |
9.5% |
92.8% |
$577,600 |
5.7% |
45.9% |
|
Pittsburgh, PA |
$75,400 |
9.9% |
27.4% |
$249,600 |
2.1% |
21.9% |
|
Portland, OR |
$274,300 |
8.3% |
80.3% |
$559,600 |
2.6% |
50.9% |
|
Charlotte, NC |
$107,900 |
16.9% |
40.1% |
$347,900 |
5.5% |
30.6% |
|
Sacramento, CA |
$270,400 |
9.8% |
101.0% |
$565,200 |
5.6% |
44.1% |
|
San Antonio, TX |
$103,500 |
18.4% |
50.4% |
$296,600 |
5.7% |
27.0% |
|
Orlando, FL |
$126,300 |
12.6% |
86.3% |
$334,400 |
0.9% |
35.5% |
|
Cincinnati, OH |
$95,400 |
8.8% |
28.1% |
$276,100 |
3.4% |
20.7% |
|
Cleveland, OH |
$70,400 |
8.0% |
19.3% |
$250,100 |
3.4% |
18.4% |
|
Las Vegas, NV |
$151,700 |
19.9% |
104.4% |
$368,300 |
9.7% |
59.6% |
|
Columbus, OH |
$94,900 |
12.3% |
40.2% |
$312,600 |
6.5% |
31.8% |
|
San Jose, CA |
$751,000 |
18.0% |
87.6% |
$2,096,700 |
18.9% |
73.8% |
|
Austin, TX |
$189,000 |
8.1% |
57.9% |
$479,900 |
5.5% |
37.8% |
|
Virginia Beach, VA |
$142,200 |
2.5% |
9.9% |
$359,400 |
0.5% |
9.0% |
|
Nashville, TN |
$147,700 |
14.3% |
58.5% |
$407,800 |
6.7% |
41.2% |
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