Zillow: Housing in Charlotte more affordable than nationwide

Home affordability in the Charlotte region and the rest of the U.S. remains increasingly difficult for the bottom one-third of wage earners as the housing market recovers but wages stagnate, according to a new analysis by real estate firm Zillow.

Zillow’s analysis, however, shows that housing for Charlotte homeowners of all income levels is more affordable compared with nationwide average figures.

In Charlotte, households in the top third of pay distribution spend 11.2 percent of their incomes on monthly mortgage payments, while those in the middle pay 13.2 percent and those at the bottom pay 21 percent.

In the U.S., the richest one-third of households spend 12.4 percent of their incomes on mortgages, while those in the middle pay 16 percent and the poorest third pay 26.1 percent.

Zillow’s analysis assumed low-wage earners would shop for the least expensive homes and that high-wage earners would shop for the most expensive. Zillow considers a housing market “unaffordable” if buyers could expect to pay more than 30 percent of their monthly income on a house payment.

Still, the analysis found, home ownership rates for Charlotte residents at the bottom two-thirds of the income distribution are lower than national averages, while the richest third in Charlotte is more likely to own a home than the national average.

In Charlotte, 83.4 percent of the top wage earners are homeowners, as are 62.3 percent in the middle and 42.2 percent of the poorest third. In the U.S., 81.7 of the top wage earners are homeowners, as are 64.5 percent in the middle tier and 47.8 percent of the poorest third.

“This is a striking example of growing income inequality in America, as upper-tier incomes grow sufficiently to keep even very expensive homes affordable for the well-heeled, while wages among the working class increasingly fail to support the purchase of even the most modest homes,” Zillow’s chief economist Stan Humphries said in a statement.

Incomes among the lowest third of workers have risen 15 percent since 2000 across the U.S., Zillow found, while home values are up 41 percent since then.

Worsening home affordability for those who make the least amount of money means that would-be homeowners are instead forced to rent, which is also increasingly difficult as monthly rent payments in Charlotte and beyond are rising rapidly.

Another recent Zillow analysis found that renting is still more affordable in Charlotte compared with the nation as a whole: Charlotte residents spend an average of 26.8 percent of their monthly income on rent, compared with the national average of 30.1 percent.

Experts say increasing the supply of all kinds of housing will help ease affordability.

This story was originally published May 4, 2015 at 9:29 AM with the headline "Zillow: Housing in Charlotte more affordable than nationwide."