Only a Dozen Large Metro Housing Markets Feature Both Affordable For-Sale Housing and Affordable Rental Housing

Renting is currently more expensive than ever in many areas, according to Zillow, making it difficult for renters to save for a down payment on a home

- Homes remain more affordable to buy in 94 of country's 100 largest metros compared to historic averages. But renting is more expensive than ever in 88 of the country's 100 largest markets.

- The Zillow Home Value Index rose to $174,800 in July, up 0.2 percent from June 2014 and 6.5 percent from June 2013.

- After three months of flat or negative monthly growth, national rents rose 0.6 percent in July from June, to a Zillow Rent Index of $1,318.

SEATTLE -- Of the nation's 100 largest metro areas, only a dozen are currently more affordablei than they historically have been for both renters and homeowners, as widespread growth in housing costs continues to outpace wage growth. Nationally, U.S. home values rose 6.5 percent year-over-year in July, according to the July Zillow® Real Estate Market Reportsii, while national rents rose 2.8 percent over the same period.

Rental affordability is currently much worse than mortgage affordability, largely because rents didn't experience the huge drop seen in home values during the recession, and instead have just kept climbing upward. Nationally, renters signing a lease at the end of the second quarter paid 29.5 percent of their income to rent, compared to 24.9 percent in the pre-bubble period. In 88 of the nation's largest metro areas, renters should currently expect to pay a larger share of their income toward rent than they would have historically.

Thanks mostly to low mortgage interest rates, affordability of for-sale homes looks much better. U.S. home buyers at the end of the second quarter could expect to pay 15.3 percent of their incomes to a mortgage on the typical home, far less than the 22.1 percent share homeowners devoted to mortgages in the pre-bubble days. As of June, home buyers in just six of the country's 100 largest metro markets analyzed by Zillow were paying a larger portion of their incomes today than historically in order to buy their area's median-priced home.

But mortgage rates are expected to rise in the coming year. When mortgage rates hit 5 percent, still very low by historical standards, the number of unaffordable metros for homeowners among the top 100 will more than double, to 13. At 6 percent mortgage interest rates, the number of unaffordable metros will almost double again, to 24.

"The affordability of for-sale homes remains strong, which is encouraging for those buyers that can save for a down payment and capitalize on low mortgage interest rates. But the health of the for-sale market is directly tied to the rental market, where affordability is really suffering" said Zillow Chief Economist Dr. Stan Humphries. "As rents keep rising, along with interest rates and home values, saving for a down payment and attaining homeownership becomes that much more difficult for millions of current renters, particularly millennial renters already saddled with uncertain job prospects and enormous student debt. In order to combat this phenomenon, wages need to grow more quickly than they are, particularly for renters, and growth in home values will need to slow."

The median annual income nationwide was $53,216 as of the end of the second quarteriii. But according to the Census Bureau, homeowners and renters make drastically different salaries – homeowners make $65,514 per year, while the typical renter in the U.S. makes just $31,888iv.

In July, median U.S. home values rose 0.2 percent from June, to a Zillow Home Value Indexv of $174,800, the slowest monthly pace of appreciation since February 2012. Looking ahead, for the 12-month period from July 2014 to July 2015, national home values are expected to rise another 2.7 percent to approximately $179,489, according to the Zillow Home Value Forecastvi.

Median U.S. rents rose 0.6 percent in July from June, to a Zillow Rent Indexvii of $1,318. The monthly spike in rents follows three straight months of flat or falling rents.

Metro	July 2014 ZHVI	July 2014 ZRI	Q2 2014 Median Income	Share of Income Needed to Afford Median Home, Currently	Share of Income Needed to Afford Median Home, Historically (1985-1999)	Share of Income Needed to Afford Median Rent, Currently	Share of Income Needed to Afford Median Rent, Historically (1985-1999)
United States	$     174,800	$    1,318	$     53,216	15.3%	22.1%	29.5%	24.9%
New York/Northern New Jersey	$     374,700	$    2,316	$     68,625	25.8%	31.6%	40.2%	23.6%
Los Angeles, CA	$     529,200	$    2,392	$     59,424	42.6%	35.2%	47.9%	34.7%
Chicago, IL	$     185,800	$    1,639	$     62,218	13.9%	22.6%	31.4%	21.2%
Dallas-Fort Worth, TX	$     147,100	$    1,400	$     61,032	11.2%	20.8%	27.4%	20.7%
Philadelphia, PA	$     199,200	$    1,543	$     64,528	14.4%	19.6%	28.5%	18.2%
Houston, TX	$     150,700	$    1,451	—	—	—	—	—
Washington, DC	$     359,900	$    2,071	$     92,766	18.0%	22.1%	26.7%	16.2%
Miami-Fort Lauderdale, FL	$     201,300	$    1,761	$     47,322	19.8%	20.7%	44.4%	26.5%
Atlanta, GA	$     148,100	$    1,191	$     59,888	11.7%	19.9%	23.8%	17.6%
Boston, MA	$     362,300	$    2,091	$     74,505	23.0%	27.8%	33.5%	25.4%
San Francisco, CA	$     688,600	$    2,874	$     76,239	42.6%	37.7%	44.3%	28.1%
Detroit, MI	$     110,900	$    1,062	$     52,552	10.1%	16.9%	24.2%	16.6%
Riverside, CA	$     277,100	$    1,629	$     53,549	24.5%	25.2%	36.3%	30.6%
Phoenix, AZ	$     193,700	$    1,202	$     53,299	17.5%	22.3%	26.9%	21.2%
Seattle, WA	$     333,000	$    1,778	$     69,711	22.7%	25.6%	30.4%	22.6%
Minneapolis-St Paul, MN	$     210,700	$    1,509	$     68,524	14.0%	19.2%	26.4%	19.3%
San Diego, CA	$     467,700	$    2,231	$     62,663	35.5%	32.9%	42.6%	33.0%
St. Louis, MO	$     128,800	$    1,076	$     54,700	11.3%	17.0%	23.6%	16.8%
Tampa, FL	$     141,100	$    1,239	$     45,699	14.9%	18.9%	32.4%	26.1%
Baltimore, MD	$     240,000	$    1,691	$     71,662	15.6%	20.8%	28.2%	24.2%
Denver, CO	$     269,200	$    1,712	$     63,578	18.9%	21.6%	31.8%	21.6%
Pittsburgh, PA	$     123,500	$    1,121	$     51,088	11.3%	15.6%	25.5%	25.8%
Portland, OR	$     274,300	$    1,496	$     59,159	21.8%	22.7%	30.2%	22.0%
Sacramento, CA	$     321,300	$    1,571	$     58,466	25.6%	29.3%	32.1%	30.2%
San Antonio, TX	$     145,800	$    1,270	—	—	—	—	—
Orlando, FL	$     161,600	$    1,300	$     48,524	15.8%	20.8%	32.1%	22.2%
Cincinnati, OH	$     136,200	$    1,192	$     54,931	11.4%	19.4%	25.9%	19.0%
Cleveland, OH	$     120,300	$    1,140	$     49,528	11.4%	19.8%	27.4%	21.1%
Kansas City, MO	$     137,400	$    1,148	$     58,330	11.2%	21.3%	23.3%	13.1%
Las Vegas, NV	$     181,100	$    1,178	$     51,047	16.8%	24.1%	27.7%	23.1%
San Jose, CA	$     803,900	$    3,050	$     96,868	39.5%	34.9%	37.1%	23.0%
Columbus, OH	$     143,900	$    1,236	$     55,577	12.1%	20.0%	26.6%	19.3%
Charlotte, NC	$     154,000	$    1,194	$     54,720	13.3%	19.2%	25.9%	17.2%
Indianapolis, IN	$     128,900	$    1,181	$     55,000	11.2%	22.0%	25.7%	17.8%
Austin, TX	$     216,900	$    1,604	—	—	—	—	—