Home values have been rising throughout the pandemic, but they’re starting to get a little ridiculous. In some U.S. cities, your home's appreciation over the past year may be worth more than your annual salary.
Appreciating home values have exceeded median salaries in 25 of the country’s largest cities, according to new research by Zillow, an online real estate marketplace. In many of these cities, only white-collar or knowledge-worker salaries can even come close to matching the rate of home value appreciation.
Some of the cities analyzed by Zillow had only marginal differences between home value growth and median salaries, a few thousand dollars perhaps. But in more expensive coastal markets like California and Hawaii, the chasm is becoming impossibly wide, while smaller towns with growing populations and booming housing markets, like Boise City and Phoenix, are also seeing home values appreciate fast.
In some of these cities, the discrepancy is so big that it could be a highly respectable salary all on its own. Here are the top 10 metro areas by differences between home value growth and median salaries:
San Jose-Sunnyvale-Santa Clara, Calif. ($136,277)
San Francisco-Oakland-Hayward, Calif. ($129,914)
San Diego-Carlsbad, Calif. ($105,790)
Urban Honolulu, Hawaii ($87,254)
Los Angeles-Long Beach-Anaheim, Calif. ($81,979)
Boise City, Idaho ($74,979)
Seattle-Tacoma-Bellevue, Wash. ($66,129)
Riverside-San Bernardino-Ontario, Calif. ($66,014)
Salt Lake City, Utah ($65,901)
Phoenix-Mesa-Scottsdale, Ariz. ($51,470)
Several of these cities, especially those in California, have seen home values soar over the past year. San Jose, the city with the biggest margins in the Zillow study, also had the largest home value growth, an eye-watering $229,277.
Salaries have been unable to keep up with soaring home prices and high inflation. San Jose truly did top all the categories on the list. In addition to having the highest rate of home value growth, the city also had the highest median income of the ranked cities: $93,000 pretax. But even Silicon Valley salaries are unable to make up for the $136,000 gap between incomes and home values, the average salary of an oral surgeon.
The typical value of a middle-tier U.S. home is now $331,533, according to Zillow, more than 20% higher than home values were in January 2021 and a huge jump from the pre-pandemic era. In 2019, before the pandemic upended the housing market, the median U.S. home was worth around $229,000, and home values had grown by 5.2% compared to 2018.
Home values are not exactly the same as the more subjective price real estate may eventually sell for, but the wild housing market of the past few years has changed all that. Pandemic-era remote working and a large millennial demographic maturing into homebuying age has created a huge demand for new homes in the country, but a low supply of homes for sale means that homeowners are the ones calling the shots, increasing competition and driving up prices.
There may be some relief on the horizon. New-home building picked up again in February, with construction starts 22% higher than last year, and mortgage rates are on the up, which should draw more people out of the homebuying market.
But even though increased inventory and reduced competition can help cool the market and decelerate prices, they probably won’t return things to any semblance of a pre-pandemic normal before 2023. Bank of America recently forecast home prices to rise 10% over the rest of the year, lower than the 18.8% price growth we saw in 2021, but still well above the 4.6% average annual home price growth the American housing market has been accustomed to since 1989.
This story was originally featured on Fortune.com