December 9, 2022

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US cities where you need to earn more than $200,000 to buy a home

US cities where you need to earn more than $200,000 to buy a home

A new study finds that homeownership costs continue to squeeze all but the wealthiest buyers, and prospective homeowners now need to earn $200,000 or more in eight U.S. cities to purchase a typical home.

Mortgage payments in the United States rose an average of 45.6% last year. and with Interest rates on 30-year fixed-rate mortgages hover around 7%Homebuyers need to spend more just to keep up with rising financing costs. According to a new analysis by real estate platform Redfin.

On average, a home buyer in the United States must earn $107,281 to afford an average monthly mortgage payment of $2,682, up from $73,668 a year ago, as of October, Redfin finds.

But homeownership costs also vary widely by market, with many cities requiring a much larger income to afford the monthly mortgage payments for a typical home. Of the 100 largest metro areas in the United States, these eight markets are ranked as the least expensive, based on income needs.

1. San Francisco

Median home price: $1,497,000

Income needed to afford an average house price: $402,821

2. San Jose, California

Median home price: $1,350,000

Income needed to afford an average house price: $363,265

3. Anaheim, California

Median home price: $945,000

Income needed to afford an average house price: $254,286

4. Oakland, California

Median home price: 920 thousand dollars

Income needed to afford an average house price: $247,559

5. Los Angeles

Median home price: $823,500

Income needed to afford an average house price: $221,592

6. San Diego

Median home price: 790 thousand dollars

Income needed to afford an average house price: $212,577

7. Oxnard, California

Median home price: $782,500

Income needed to afford an average house price: $210,559

8. Seattle

Median home price: $763,000

Income needed to afford an average house price: $205,312

with Chronic housing shortage And some of the wealthiest residents in the United States, California contains many of the more expensive markets to buy a typical home with, seven of which require earnings of $200,000 or more.

New York City wasn’t far behind on the list, ranking 11th overall. For a median-priced home in the Big Apple, you’ll need an income of $178,942 to keep up with the payments.

For the purposes of the study, the affordability of a mortgage payment assumes that a particular homebuyer spends no more than 30% of their income on housing – Common rule of thumb for budget expenditures.

Median home prices are based on Redfin sales data between October 2021 and October 2022, and average mortgage payments assume a buyer has made a 5% down payment. Mortgage rates are based on average rates for October 2021 and October 2022, which are 3.1% and 6.9% respectively.

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