Homes "Earn" Minimum Wage or More in Nearly Half the Nation's Largest Cities
In 24 of the 50 largest U.S. cities, home value appreciation per working-hour is higher than local minimum wage, but renters are struggling just to come up with enough money to break into the market
- Home values in San Jose, Calif., San Francisco and Seattle have been appreciating more than 3.5 times faster per working hour than the cities' minimum wage workers earn.
- Homeownership is widely viewed as a good way to accumulate wealth, but many renters are struggling to come up with enough money for a down payment to break into the market.
- The typical U.S. homeowner is gaining $7.09 of equity in their home every working hour, $0.16 less than federal minimum wage.
- The typical homeowner has 40 percent of their wealth tied up in their home, and 70 percent of Americans view their home as a positive long-term investment.
SEATTLE, April 9, 2018 /PRNewswire/ -- Home values have been appreciating more per working hour than local minimum wage pays in about half of the nation's 50 largest cities, according to a new Zillow® analysisi.
The typical U.S. homeowner is gaining $7.09 of equity in their home every hour they're at the officeii, slightly less than the federal minimum wage of $7.25.
But homeowners in 24 of the 50 largest U.S. cities are in a much more favorable position, especially those in the booming tech towns of San Jose, Calif., San Francisco and Seattle.
In San Jose, the typical homeowner is gaining $99.81 of equity in their home every working-houriii, but minimum wage in the city is just $13.50. That means the typical home in San Jose is "earning" over seven times local minimum wage. Even still, the average hourly wage in the San Jose metro is $43.71, which is over two times less than local home value appreciation per working-hour.
While homeownership is widely viewed as a good way to accumulate wealth, many renters are struggling to come up with enough money for a down payment to break into the market. Median rent across the U.S. is about 3 percent higher than it was a year ago, making it increasingly difficult for renters to save. On top of that, home values are up 8 percent annually, which means the amount needed for a down payment is a continually rising target.
"As home values continue to rise at a rapid clip, many homeowners have earned more in home equity over the past year than they would have by working a minimum wage job – and in some areas, more than they'd have earned even if they had a job paying a six-figure annual salary," said Zillow senior economist Aaron Terrazas. "But equity 'earnings' are a lot different than the salary typically taken home on the first and fifteenth of each month; it is not money that accumulates directly into a checking account or that can be spent on daily needs. Equity is only available once a homeowner chooses to sell a home, and even then is often subject to various taxes and other expenses. Still, particularly for homeowners that have already or are very close to paying off a mortgage, this supplemental 'income' – especially if allowed to accumulate over several years – can essentially serve as a kind of second job that pays directly to a homeowner's bottom line, without nearly as much actual work involved in collecting it."
Home values have been appreciating in San Francisco at a rate more than four times the city's minimum wage, and in Seattle, which has the highest minimum wage among all cities analyzed at $15 per hour, the typical homeowner is gaining $54.24 of equity per working-hour.
A home is often a person's biggest financial investment, and according to the 2017 Zillow Group Consumer Housing Trends Report, the typical American homeowner has 40 percent of their wealth tied up in their home. A recent Zillow survey found that 70 percent of Americansiv view their home as a positive long-term investment.
Homeowners on the West Coast aren't the only ones benefiting from a hot housing market. Home values in New York, Las Vegas, Honolulu and Nashville have been appreciating over $6 more per working-hour than the city's minimum-wage earners make.
In some parts of the country, where home value appreciation is slower, local minimum wage is $10 or more higher than the hourly pace of home value appreciation. In Washington D.C., minimum wage is $12.50 per hour, but home values have been appreciating just $1.53 per working-hour. A similar trend holds true in Chicago and Portland.
| City |
Zillow Home Value Index (ZHVI) |
ZHVI $ Increase Over Past Year |
ZHVI Increase Per Working-Hour |
Minimum Wagev |
| United States |
$ 210,200 |
$ 14,800 |
$ 7.09 |
$ 7.25 |
| New York |
$ 721,100 |
$ 88,000 |
$ 42.17 |
$ 13.00 |
| Los Angeles |
$ 671,000 |
$ 55,000 |
$ 26.35 |
$ 12.00 |
| Chicago |
$ 220,900 |
$ 2,100 |
$ 1.01 |
$ 11.00 |
| Philadelphia |
$ 147,200 |
$ 12,600 |
$ 6.04 |
$ 7.25 |
| Phoenix |
$ 227,300 |
$ 19,500 |
$ 9.34 |
$ 10.50 |
| Las Vegas |
$ 247,700 |
$ 35,200 |
$ 16.87 |
$ 8.25 |
| San Diego |
$ 618,200 |
$ 64,400 |
$ 30.86 |
$ 11.50 |
| Dallas |
$ 178,600 |
$ 16,100 |
$ 7.71 |
$ 7.25 |
| San Jose |
$ 1,078,300 |
$ 208,300 |
$ 99.81 |
$ 13.50 |
| Jacksonville |
$ 166,100 |
$ 19,700 |
$ 9.44 |
$ 8.10 |
| San Francisco |
$ 1,289,300 |
$ 125,500 |
$ 60.13 |
$ 14.00 |
| Austin |
$ 337,600 |
$ 24,500 |
$ 11.74 |
$ 7.25 |
| Detroit |
$ 44,600 |
$ 6,200 |
$ 2.97 |
$ 9.25 |
| Columbus |
$ 140,400 |
$ 12,400 |
$ 5.94 |
$ 8.15 |
| Memphis |
$ 84,200 |
$ 4,800 |
$ 2.30 |
$ 7.25 |
| Charlotte |
$ 203,600 |
$ 23,100 |
$ 11.07 |
$ 7.25 |
| El Paso |
$ 115,700 |
$ 1,900 |
$ 0.91 |
$ 7.25 |
| Boston |
$ 569,500 |
$ 35,300 |
$ 16.91 |
$ 11.00 |
| Seattle |
$ 740,700 |
$ 113,200 |
$ 54.24 |
$ 15.00 |
| Baltimore |
$ 125,500 |
$ 4,200 |
$ 2.01 |
$ 9.25 |
| Denver |
$ 407,100 |
$ 33,200 |
$ 15.91 |
$ 10.20 |
| Washington |
$ 553,600 |
$ 3,200 |
$ 1.53 |
$ 12.50 |
| Nashville |
$ 250,200 |
$ 28,200 |
$ 13.51 |
$ 7.25 |
| Milwaukee |
$ 112,500 |
$ 8,800 |
$ 4.22 |
$ 7.25 |
| Tucson |
$ 174,700 |
$ 13,400 |
$ 6.42 |
$ 10.50 |
| Portland |
$ 413,300 |
$ 2,700 |
$ 1.29 |
$ 11.25 |
| Oklahoma City |
$ 131,900 |
$ (2,700) |
$ (1.29) |
$ 7.25 |
| Omaha |
$ 162,800 |
$ 12,300 |
$ 5.89 |
$ 9.00 |
| Albuquerque |
$ 189,800 |
$ 3,600 |
$ 1.72 |
$ 8.80 |
| Fresno |
$ 228,700 |
$ 21,700 |
$ 10.40 |
$ 11.00 |
| Sacramento |
$ 323,700 |
$ 32,600 |
$ 15.62 |
$ 11.00 |
| Mesa |
$ 234,800 |
$ 16,200 |
$ 7.76 |
$ 10.50 |
| Long Beach |
$ 583,000 |
$ 38,900 |
$ 18.64 |
$ 11.00 |
| Kansas City |
$ 128,300 |
$ 9,800 |
$ 4.70 |
$ 7.25 |
| Virginia Beach |
$ 260,400 |
$ 6,100 |
$ 2.92 |
$ 7.25 |
| Colorado Springs |
$ 272,700 |
$ 27,600 |
$ 13.22 |
$ 10.20 |
| Atlanta |
$ 225,800 |
$ 20,900 |
$ 10.01 |
$ 7.25 |
| Miami |
$ 312,700 |
$ 11,900 |
$ 5.70 |
$ 8.25 |
| Oakland |
$ 755,600 |
$ 80,500 |
$ 38.57 |
$ 13.23 |
| Tulsa |
$ 116,800 |
$ 5,300 |
$ 2.54 |
$ 7.25 |
| Cleveland |
$ 61,700 |
$ 5,700 |
$ 2.73 |
$ 8.15 |
| Honolulu |
$ 702,100 |
$ 36,400 |
$ 17.44 |
$ 10.10 |
| Minneapolis |
$ 248,000 |
$ 17,200 |
$ 8.24 |
$ 10.00 |
| Baton Rouge |
$ 171,600 |
$ 16,500 |
$ 7.91 |
$ 7.25 |
| New Orleans |
$ 172,700 |
$ (1,700) |
$ (0.81) |
$ 7.25 |
| Arlington |
$ 190,900 |
$ 16,800 |
$ 8.05 |
$ 7.25 |
| Raleigh |
$ 230,900 |
$ 13,200 |
$ 6.32 |
$ 7.25 |
| Wichita |
$ 125,200 |
$ 4,000 |
$ 1.92 |
$ 7.25 |
| Tampa |
$ 201,300 |
$ 20,400 |
$ 9.77 |
$ 8.10 |
| Anaheim |
$ 590,800 |
$ 30,200 |
$ 14.47 |
$ 11.00 |
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 Zillow analyzed home value appreciation over the past year among the 50 largest U.S. metros to see how much home values have appreciated per working-hour.
ii Assuming an eight-hour work day. This equates to 2,087 working hours in a year, according to OPM.GOV.
iii A working-hour is referring to time spent at work, with 2,087 working hours in a year.
iv According to the September 2017 Zillow Housing Aspirations Report, 70 percent of respondents said owning a home is either an excellent or good long-term investment.
v Minimum wage data from Paywizard.org.
SOURCE Zillow
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