Buyers' Income Rises Along with Home Prices
Buyers became richer between 2019 and 2021, notably in four “top 10” Fla. metros, as wealthier out-of-staters opted to buy a Fla. home during the pandemic.
A three-year study of buyers’ incomes shows the impetus for rising home prices in many of the nation’s hottest cities.
A study by Redfin created a top-10 list of metros where buyers’ median income grew the most between 2019 and 2021. Of those, four are in Florida. Nationally, buyers’ incomes grew 6.8%; in those Florida metros, it hovered around 17%.
In the study, Boise, Idaho, topped the list. The typical Boise homebuyer earned $98,000 in 2021, up 24.1% from 2019. Boise experienced the biggest homebuyer income increase of the 100 most populous U.S. metros mostly because remote workers moved in from pricey coastal job centers during the pandemic.
Buyers’ median income growth, 2019-2021: Top 10 metros
- Boise, Idaho: 24.1% growth to $98,000 income in 2021 (home prices rose 53%)
- Austin, Texas: 19.1% growth to $137,000 (home prices rose 48%)
- Cape Coral: 18.5% growth to $96,000 (home prices rose 48%)
- North Port, Florida: 18.5% growth to $109,000 (home prices rose 47%)
- West Palm Beach: 17.0% growth to $110,000 (home prices rose 33%)
- Miami: 16.9% growth to $104,000 (home prices rose 38%)
- Phoenix, Arizona: 15.9% growth to $95,000 (home prices rose 48%)
- Stockton, California: 15.3% growth to $113,000 (home prices rose 34%)
- Tacoma, Washington: 15.1% growth to $107,000 (home prices rose 39%)
- Salt Lake City, Utah: 13.8% growth to $91,000 (home prices rose 41%)
Nationally, buyers’ median incomes rose 6.8% to $94,000, and median home-price growth was 29%, according to the study
According to Redfin’s economists, the outsized income increases in those places – all popular migration destinations – are due largely to relocating remote workers with high hometown salaries. An influx of people also intensified competition for a limited supply of homes, with local buyers largely unsuccessful as they competed with out-of-towners.
The average out-of-towner moving to Miami in 2021, for example, had 25% more to spend on a home than the average local resident.
“For white-collar workers earning high salaries, remote work is a huge financial boon. It enables them to move from a tech center like San Francisco to a more affordable part of the country like Boise or Salt Lake City, get more home for their money and save some for a rainy day,” says Redfin Senior Economist Sheharyar Bokhari. However, it “can have the opposite effect on locals in those destinations – especially renters – who are watching from the sidelines as home prices skyrocket while their income stays mostly the same.”
Pandemic boomtowns starting to slow
Boise, Austin, Cape Coral, North Port, Phoenix and Tacoma are among the 20 housing markets that cooled fastest in the first half of 2022. And Boise, Cape Coral, North Port, West Palm Beach, Miami, Stockton and Salt Lake City are among the 25 housing markets most susceptible to home-price declines if the U.S. enters a recession.
But even though they’re susceptible to a recession-driven downturn, these places are unlikely to see housing-market crashes precisely because homebuyers there have relatively high incomes.
“People are still moving in from California and they still have enough money to buy nice homes in desirable neighborhoods, sometimes with all cash,” says Austin Redfin agent Gabriel Recio. “But the days of homes selling for 25% over asking price with multiple offers are over. Buyers are no longer as eager now that mortgage rates are up and there’s buzz in the air about the slowing housing market. Local buyers–and even buyers coming from out of town–now have a chance to take their time and buy a home at asking price or even under asking price.”