As record-low inventory causes home prices to rise nationwide, higher salaries are required to afford monthly home payments. Using its mortgage calculator, SmartAsset crunched the numbers and found that residents in three big cities would need to make more than $110,000 to afford a home (including the mortgage, property taxes and homeowners insurance). That's nearly double the median household income of $57,617 nationwide.
In other big cities, however, owning a home is far more affordable. SmartAsset estimates that in 10 of the 15 cities it analyzed, the median household income is enough to afford the median home. In fact, after making a 20% down payment on the median-priced home, residents in Indianapolis only require an annual income of $21,955 to afford their monthly home payments, assuming they have no additional debt.
Findings:
● Costly California – California cities occupy four of the five top spots with the highest salary needed to afford home payments. In two cities - San Jose and San Francisco - our mortgage calculator estimates you would need to earn at least $131,000 and $164,000, respectively, in order to afford home payments. Median incomes in these cities, while high when compared to national incomes, do not meet those figures. The median household income in San Francisco is $103,800 and in San Jose it’s $101,900.
● Midwest cities are more affordable – According to SmartAsset's data, the minimum income you need to afford payments on the average home in Indianapolis is $21,900. That is about half of the median household income in Indianapolis. Data out of Columbus, Ohio tells a similar story. The average household there earns 1.8 times more than what the SmartAsset mortgage calculator recommends as a minimum income. Even in Chicago - the most expensive Midwestern city on the list - the median household earns about 10% more than what our calculator recommends as the minimum income needed to afford home payments on the average home in the city.
● Affordable big cities – We estimate that in 10 of the 15 cities we analyzed the median household income is enough to afford the median home. There’s a wide range between cities which can afford the average home on the average income. For example in Austin, Texas and Chicago, SmartAsset estimate residents earning the median income could afford a home about 10% more expensive than the average one, while in both Jacksonville, Florida and San Antonio, residents earning the median income could afford a home 80% more expensive than the average one, according to the mortgage calculator.
