The Salary Needed to Buy a Home in 50 U.S. Metro Areas

Have you ever wondered how much you would have to earn to be able to afford in a home in your area? And, how does this compare to other areas around the country?

The Salary Needed to Buy a Home in 50 U.S. Metro Areas

Here in the greater Charlottesville area, the latest first quarter numbers from CAAR for 2019 indicate the following: The Median Sales Price decreased 11.3 percent to $306,000 for Single-Family Detached homes, but increased 9.8 percent to $265,835 for Single-Family Attached homes. 

Nationally, the Visual Capitalist website and HowMuch.net have released the latest numbers and created a map to show potential Home Buyers how much they can afford in today’s market. 

Over the last year, home prices have risen in 49 of the biggest 50 metro areas in the United States. At the same time, mortgage rates have hit seven-year highs, making things more expensive for any prospective home buyer.

The Least and Most Expensive Metro Areas

As a reference point, the median home in the United States costs about $257,600, according to the National Association of Realtors.

                    Median Home Price         Monthly Payment (PITI)             Salary Needed

National     $257,600                                 $1,433.91                             $61,453.51

With a 20% down payment and a 4.90% mortgage rate, and taking into account what’s needed to pay principal, interest, taxes, and insurance (PITI) on the home, it would mean a prospective buyer would need to have $61,453.51 in salary to afford such a purchase.

Based on where you live, this national estimate may seem extremely low or quite high. That’s because the salary required to buy in different major cities in the U.S. can fall anywhere between $37,659 to $254,835.

The 10 Least Expensive Metro Areas

Here are the least expensive metro areas in the U.S. to live in, based on data and calculations from HSH.com:

Rank Metro Area Median Home Price Monthly Payment (PITI) Salary Needed

#1 Pittsburgh         $141,625                         $878.73                         $37,659.86

#2 Cleveland         $150,100                         $943.55                         $40,437.72

#3 Oklahoma City        $161,000                         $964.49                         $41,335.41

#4 Memphis                 $174,000                         $966.02                         $41,400.93

#5 Indianapolis         $185,200                         $986.74                         $42,288.92

#6 Louisville                 $180,100                         $987.54                         $42,323.15

#7 Cincinnati         $169,400                         $1,013.37                 $43,429.97

#8 St. Louis                 $174,100                         $1,031.70                 $44,215.56

#9 Birmingham         $202,300                         $1,040.51                 $44,593.35

#10 Buffalo                  $154,200                         $1,066.29                 $45,698.05

Pittsburgh ranks as the least expensive metro area in the U.S. to buy a home. According to these calculations, buying a median home in Pittsburgh – which includes the surrounding metro area – requires an annual income of less than $40,000 to buy.

Just missing the list was Detroit, where a salary of $48,002.89 is needed.

The 10 Most Expensive Metro Areas

Here are the priciest markets in the country, also based on data from HSH.com:

Rank Metro Area Median Home Price Monthly Payment (PITI) Salary Needed

#1 San Jose                 $1,250,000        $5,946.17         $254,835.73

#2 San Francisco         $952,200                $4,642.82         $198,978.01

#3 San Diego         $626,000                $3,071.62         $131,640.79

#4 Los Angeles         $576,100                $2,873.64         $123,156.01

#5 Boston         $460,300                $2,491.76         $106,789.93

#6 New York City        $403,900                $2,465.97         $105,684.33

#7 Seattle        $489,600                $2,458.58         $105,367.89

#8 Washington, D.C.   $417,400                $2,202.87         $94,408.70

#9 Denver        $438,300                $2,139.02         $91,672.45

#10 Portland                $389,000                $1,987.37         $85,173.08

Topping the list of the most expensive metro areas are San Jose and San Francisco, which are both cities fueled by the economic boom in Silicon Valley. Meanwhile, two other major metro areas in California, Los Angeles and San Diego, are not far behind.

New York City only ranks in sixth, though it is worth noting that the NYC metro area extends well beyond the five boroughs. It includes Newark, Jersey City, and many nearby counties as well.

Notes on Calculations

Data on median home prices comes from the National Association of Realtors and is based on 2018 Q4 information, while national mortgage rate data is derived from weekly surveys by Freddie Mac and the Mortgage Bankers Association of America for 30-year fixed rate mortgages.

Calculations include tax and homeowners insurance costs to determine the annual salary it takes to afford the base cost of owning a home (principal, interest, property tax and homeowner’s insurance, or PITI) in the nation’s 50 largest metropolitan areas.

Standard 28% “front-end” debt ratios and a 20% down payments subtracted from the median-home-price data are used to arrive at these figures.

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