8 Mar 2015

This Amazing Map Shows the Salary You Need to Buy a Home in Different US Cities

Are you in the market for buying a home? Or, are you already tired of renting and wondering what salary you’ll eventually need to make in order to buy a house in your area without pinching too many pennies?
Whatever your circumstances, this new informative map of 27 US cities provides detailed information from an expert mortgage research site, HSH.com
Here’s definitive proof that San Francisco’s real estate market is insane. HSH.com, a mortgage research site, has estimated how much salary you need to earn to afford the principal, interest, taxes and insurance payments on a median-priced home in 27 metro areas.

On a national scale, a buyer who puts 20 percent down would need to earn a salary of $48,604 to afford the median-priced home in America. But that total varies a lot from city to city. Pittsburgh, Cleveland, St. Louis and Cincinnati rank as the most affordable metros in which to buy a new home – HSH.com estimates that you can buy the median home while making less than $34,000 – while New York, Los Angeles and San Diego are at the high end, requiring salaries of nearly $90,000 or more. But the most expensive city by far is San Francisco, where the site estimates you would need to make $142,448 to buy the median home in the area.
The site’s calculations assume that a buyer spends 28 percent of their gross monthly income on housing, including principal, interest, taxes and insurance, (in line with industry guidelines for standard “front-end” debt ratios) and makes a 20 percent down payment on a house. To calculate the cost of buying the median-priced house in a given urban area, HSH.com combines its own average interest rate for 30-year, fixed-rate mortgages in the fourth quarter; the National Association of Realtors’ data on median-home prices in the fourth quarter; average metropolitan property tax data from the Tax Foundation, a Washington, DC-based think tank; and statewide average homeowner insurance premium costs from the Insurance Information Institute, an industry organization.
map
You can find out more, including information on methodology and the group’s research data, here.
Just make sure you keep in mind the following warning, via The Washington Post:
The data is, of course, an estimate — for one, property taxes and insurance costs will vary depending on the property — but it gives you a good idea of how housing costs varied around the country in the fourth quarter. …
Since home prices are in the midst of a three year gain (although the fourth quarter saw a slight decrease from the third), expect mortgage rates to drop as well. That means the salary you need to buy an affordable home might not be as much as you think.
In other words, now is a pretty good time to consider buying a home. 
The theme during the fourth quarter was increased affordability.
Home prices declined from the third to the fourth quarter in all of the metro areas on our list but one. But on a year-over-year basis, home prices have continued to trend upward.

“Home prices in metro areas throughout the country continue to show solid price growth, up 25 percent over the past three years on average,” said Lawrence Yun, NAR chief economist.
Along with affordable home prices, mortgage rates fell across the board which caused the required salaries for our metro areas to decline…
“Low interest rates helped preserve affordability last quarter, but it’ll take stronger income gains and more housing supply to help meet the pent-up demand for buying,” said Yun.
On a national scale, with 20 percent down, a buyer would need to earn a salary of $48,603.82 to afford the median-priced home. However, it’s possible to buy a home with less than a 20 percent down payment.

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