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Median salary needed to buy a home is now $76K

A family making the median national income can no longer afford the typical home in 35 of the country’s 50 largest cities, according to a new study.

Based on home price data from the first quarter of the year, the salary needed to afford the median American home was nearly $76,000 — about $8,500 more than the typical household actually makes, according to an analysis by Visual capitalism.

The study found that San Jose leads the nation in unaffordable homes, with the median home price at $1,875,000, requiring a salary of at least $330,758 to afford the expected monthly payments of $7,718.

The top four markets for median home prices were all in Californiawith San Francisco, San Diego and Los Angeles next San Jose.

New York City ranked seventh on the list with a median home price of $578,100 requiring an annual salary of $129,458. The Big Apple ranked slightly below Boston, where an income of $130,203 is needed to afford the typical home price of $639,000.

Meanwhile, the median household income across the country was just $67,500, which would be enough to afford the typical home in only 15 of the cities on the list.

Most of the more affordable cities were located in the Midwest. Pittsburgh ranked the most affordable, with a median home price of just $185,700, requiring a salary of just $42,858 to afford monthly payments.

In addition to Pittsburgh, a family making $50,000 a year or less could afford the median home payment in St. Louis, Louisville, Cleveland and Oklahoma City, the study found.

A new study shows the median salary needed to pay typical take-home pay in 50 major U.S. cities. Median home payments are now unaffordable for the typical American family in all but 15 of the cities

Typical income varies across the country, and the cities with the most expensive homes tend to have some of the highest average salaries.

Still, median take-home pay exceeded median local salaries in many of the cities on the list — a symptom of the broader problem of unaffordability that prices have long outpaced wages.

Consumer prices rose 9.1 percent in the past year, the biggest annual increase since 1981. Housing costs, which make up a third of the consumer price index, were up 5.6 percent in June from a year ago — though this data only are collected twice a year, and probably lies behind real costs.

The new affordability study assumes a down payment of 20 percent, and assumes that no more than 28 percent of a family’s income would go toward monthly home payments.

The report was based on data from Home Sweet Home for the first quarter of 2021, which put the median US home price at $368,200 and the average fixed mortgage rate at 4 percent.

Home prices and mortgage rates have increased since then, meaning the study itself may underestimate the salary needed to afford a home in many markets.

The study found that San Jose leads the nation in unaffordable homes, with the average home price at $1,875,000, requiring a salary of at least $330,758 to pay the expected monthly payments of $7,718

The study found that San Jose leads the nation in unaffordable homes, with the average home price at $1,875,000, requiring a salary of at least $330,758 to pay the expected monthly payments of $7,718

The study found that San Jose leads the nation in unaffordable homes, with the average home price at $1,875,000, requiring a salary of at least $330,758 to pay the expected monthly payments of $7,718

Although the housing market has cooled in recent months, prices continue to rise, albeit at a slower pace than last year

Although the housing market has cooled in recent months, prices continue to rise, albeit at a slower pace than last year

Although the housing market has cooled in recent months, prices continue to rise, albeit at a slower pace than last year

The national median home price jumped 13.4 percent from a year earlier to $416,000 in June. That’s an all-time high in data going back to 1999, according to the National Association of Realtors.

Last week, the average long-term US mortgage rate stood at 4.99 percent, the first time it has dropped below 5 percent for the first time in four months.

That’s still nearly twice the rates seen as recently as January, as the cost of mortgages has risen with higher benchmark rates from the Federal Reserve.

The Fed increased its key lending rate by three-quarters of a point last week, the second such increase in less than two months, and took the policy rate to 2.5 percent, up from near zero at the start of the year.

But even if interest rates rise, house prices have yet to fall back to earth after being harder than wages for a while.

Although the booming housing market has cooled somewhat, the most recent data showed it continued to rise, with demand outstripping tight supply.

A report from S&P CoreLogic Case-Shiller showed national home prices rose 19.7 percent in May from a year ago, after rising 20.6 percent in April.

National home prices rose 19.7 percent in May from a year ago, after rising 20.6 percent in April

National home prices rose 19.7 percent in May from a year ago, after rising 20.6 percent in April

National home prices rose 19.7 percent in May from a year ago, after rising 20.6 percent in April

A report from S&P CoreLogic Case-Shiller showed that home prices continue to rise in 20 major US cities, but that the increases are beginning to moderate on the West Coast, where prices are already the highest

A report from S&P CoreLogic Case-Shiller showed that home prices continue to rise in 20 major US cities, but that the increases are beginning to moderate on the West Coast, where prices are already the highest

A report from S&P CoreLogic Case-Shiller showed that home prices continue to rise in 20 major US cities, but that the increases are beginning to moderate on the West Coast, where prices are already the highest

Home prices remained up double digits from a year ago in every city covered by the index, even as increases began to moderate in many markets.

Tampa led the way with a 36.1 percent annual price increase, followed by Miami with a 34 percent increase, and Dallas with a 30.8 percent increase.

On an annual basis, Minneapolis had the smallest increase in home prices from a year ago at 11.5 percent, followed by Washington DC at 12.2 percent and Chicago at 12.9 percent.

‘House data for May 2022 remained strong as price gains slowed slightly from very high levels,’ said Craig J. Lazzara, Managing Director at S&P DJI.

‘However, at city level we also see evidence of a slowdown. Price gains for May exceeded those for April in only four cities,’ he added. ‘As recently as February of this year, all 20 cities were in acceleration.’

The contract rate on a 30-year fixed-rate mortgage averaged 5.54% at the end of July as the Fed's key policy rate increases

The contract rate on a 30-year fixed-rate mortgage averaged 5.54% at the end of July as the Fed's key policy rate increases

The contract rate on a 30-year fixed-rate mortgage averaged 5.54% at the end of July as the Fed’s key policy rate increases

In another sign of a slowdown in the housing market, the NAR said last month that pending home sales in June dropped 20 percent from a year ago.

‘Contract signings to buy a home will continue to fall as long as mortgage rates continue to climb, as has happened so far this year,’ said NAR Chief Economist Lawrence Yun.

“Home sales will decline by 13 percent in 2022, according to our latest projection,” Yun added, predicting that mortgage rates will stabilize near 6 percent and that home sales will begin to rise again in early 2023.

The layoffs in the housing and loan sector have already begun. Among those reporting cuts in recent months are online mortgage company loanDepot, online brokerage Redfin, and Compass.

The nation’s largest bank by assets, JPMorgan Chase, laid off hundreds of its mortgage units and transferred hundreds of others.

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