A new Zillow analysis finds that in the largest rental markets across the nation, 14% of renters could actually afford to purchase a home. Strong credit scores and relatively high incomes position these renters to buy a median-priced home in their area.
San Jose, Calif., San Diego, and San Francisco, home to tech-hubs and high salary jobs, have the highest share of residents that could afford to buy a home based on their credit score and income. Even in San Jose, Calif., where the median home price is almost $1 million, 35.6% of renters have the necessary means to purchase a home in the area. San Francisco follows with 26.8% of renters who could afford the $812,300 median price, while San Diego has 23.6% of renters who could buy a $512,000 home.
Metros that already have high home ownership rates and metros that were hit hard during the housing crisis have a much lower number share of renters that are financially qualified to purchase a home. Houston has the least number of renters at 6.8% that could purchase a $172,900, the median price for the Texas city. Indianapolis and Cleveland, followed with the lowest shares at 7.2% and 7.9%, respectively.
"When faced with hurdles of high prices and low inventory, first-time home buyers are renting longer than ever before even if they are qualified to buy," said Zillow Chief Economist Dr. Svenja Gudell in a news release from ZIllow Friday. "San Jose, San Diego and Seattle are among the most competitive places for buyers, and the going isn't any easier for renters – as they are competing against throngs of financially sound applicants with strong credit and high incomes."