Salary Needed to Afford a MedianPriced Home in 27 Metro Areas

first_imgSalary Needed to Afford a Median-Priced Home in 27 Metro Areas median home prices National Association of Realtors 2015-05-27 Staff Writer The salary consumers need to purchase a home varies from city-to-city across the country, but San Francisco remains the most unaffordable city all consumers except those with high salaries, according to a recent researchers took the National Association of Realtors’ (NAR) 2015 first-quarter data for median-home prices and’s 2015 first-quarter average interest rate for 30-year, fixed-rate mortgages, in order to determine how much of a consumer’s salary it would take to afford the base cost of owning a home including, the principal, interest, taxes, and insurance in 27 metro areas.“The first quarter was a soft period for the economy which helped mortgage rates fall in all 27 metros, said. “While home prices rose sharply in the majority of metro areas across the country due to high demand and low inventory, there was an even split on our list of the metros that experienced price increases and price declines.”In order to come up with the salary numbers, the researchers used standard 28 percent “front-end” debt ratios and a 20 percent down payment subtracted from the NAR’s median-home-price data. They also incorporated available information on property taxes and homeowner’s insurance costs to more accurately reflect the income needed in a given market.Nationally, with 20 percent down, a buyer would need to earn a salary of $47,253.07 to afford a median-priced home, the researchers report. However, if they only put 10 percent down, that salary increases to $54,341.84. The smaller down payment means a larger loan amount because the buyer is financing 90 percent of the home price, plus the need for Private Mortgage Insurance (PMI), all raises the income required considerably.According to the survey, San Francisco is the most unaffordable place to buy a home for all but the highest paid consumers. A median-priced home in the San Francisco metro area would require a consumer to earn $141,417 a year. Due to home-price drops, Cleveland returned to the top as the most affordable metro on the list. Compared to Cleveland, San Francisco homebuyers need to earn over $112,000 more per year to afford a median-priced home in their metro area. Meanwhile, Los Angeles was more affordable than New York City by a small $159.”Sales activity to start the year was notably higher than a year ago, as steady hiring and low interest rates encouraged more buyers to enter the market,” said Lawrence Yun, NAR chief economist. “However, stronger demand without increasing supply led to faster price growth in many markets.”View the full survey: May 27, 2015 515 Views center_img in Daily Dose, Data, Headlines, News, Origination Sharelast_img read more