• Nationwide, as of Q2 2014, a low-income household could expect to spend 26 cents of every dollar they earn paying the mortgage on a bottom-tier home.
• High-income families in the U.S. would be expected to spend only 12 cents of every dollar earned to pay the mortgage on a high-end home.

Affordability is complicated. An affordable market to some can be cripplingly unaffordable to others.

Income obviously plays a large role in determining both the types of homes and the kinds of markets that are affordable to various groups. Those making less can afford to purchase less-expensive homes in less-expensive areas, while those making more have both more purchasing power and more options of which markets to consider.

As a result, affordability needs to be calculated differently for households with different incomes. Taking our existing median affordability data a step further, we crunched the numbers to figure out the share of income needed to afford a mortgage payment on a low-, middle- and high-priced home for households making a low, middle and high income.[1]

Low-income households spend more of their income on a mortgage, even on a less-expensive home. Nationwide, as of Q2 2014, a low-income household could expect to spend 26 cents of every dollar it earns paying the mortgage on a bottom-tier home. At the same time, high-income families would be expected to spend only 12 cents of every dollar earned to pay the mortgage on a high-end home.

Combined with a national rental affordability crisis, we end up with a situation in which low-income households have an increasingly difficult time affording one of the most basic needs: A place to live.

Unsurprisingly, high-income households are faced with a much different landscape. Even at its worst point, in June 2006, high-income households could expect to pay 20 percent of their income towards a mortgage on a high-end home. At roughly the same time, in September 2006, low-income households could expect to spend almost 43 percent of their income on a mortgage for a lower-end home.

But while a national picture is useful, in real estate it is all about location. We analyzed 236 metros, and affordability is markedly better in all of them for those with higher incomes (figure 1). In general, the worst affordability is in large California metros, New York City and, interestingly, Flagstaff, Arizona (this could be because of a high number of retirees living on accumulated wealth, with little current income).

At its worst, low-income households in Los Angeles could have expected to pay roughly 138 percent of their monthly income towards a low-end home, making homeownership virtually impossible. Even high-income households suffered in Los Angeles: At its worst, high-income households could expect to pay 45 percent of their income on a higher-end mortgage.

The good news is, homes are far more affordable today than they were at the peak of the housing boom – for all households, regardless of income – thanks largely to home values that remain below their pre-recession peaks in most areas and historically low mortgage interest rates.

But while interest rates remain low across the board, home values are rising. As long as incomes keep pace, this isn’t a problem. Except incomes aren’t rising equally. In the bottom tier, median household incomes rose 16.1 percent between Q2 1999 and Q2 2014. Over the same time, incomes in the middle tier rose 25.3 percent. Upper-tier incomes over the same period rose 36 percent (figure 2).

Recently, wages for low-income earners have been essentially flat. This has caused the share of income needed to afford a lower-tier home for lower-income residents to spike over the past several quarters, even as it has remained relatively stable over the same period for middle and high-income earners.

In other words, the housing recovery has been a lot more pleasant for the rich than for the poor.

[1] In order to calculate affordability for low-income households, we use census data to calculate the median income of households in the bottom third of income. We then assume that they purchase a bottom-tier home. At Zillow we define a bottom-tier home to be a home in the bottom third of home values in their metro. We then take the median of all these homes across various geographies to get the median value of a home in the lower third of home values. We then calculate what percentage of monthly income a household would have to spend to pay the mortgage. A similar process is done with the middle and top thirds of distributions to produce a middle-income and high-income affordability.