Owning a home has long been associated with success, stability, and work ethic. An investment in your future, purchasing a home is one of your more significant financial decisions. It’s a decision nearly two out of every three Americans have made in recent years.
Interest rates, housing markets, community and school ratings, and crime statistics are only a few of the factors that may weigh into the decision to buy a home. This week, the 30-year fixed mortgage rate is 4.1 percent, and next week this rate will likely change.
While finding the right home that will earn you a decent return on your investment is essential, perhaps even more critical is the need to find a home you can afford. HSH recently published a report on the annual salary required to purchase a home in 27 different metropolitan areas. Based on this report and other supplemental data, let’s see where you can afford to buy at the median home price.
Annual income: $30,000-$40,000
If your annual earnings are at the lower end of this scale, you can afford a house at the median price in several major markets. This includes Cleveland, where the median home price is $102,100 and the monthly payment is around $695. You could also afford to buy in Pittsburg, St. Louis, or Cincinnati, as the price of a mid-level house in these areas ranges from $120,000 to $121,700. You’d be looking at a monthly payment of between $700 and $750. A three-bedroom, two-bathroom 2,065-square-foot Zillow listing from earlier this summer represents a typical Cincinnati home that is right around the median price at $117,500.
If your earnings are at the higher end of this scale, you can afford to live at the median in Atlanta or in Tampa, where mid-level housing prices are around $140,000 to $145,000.
At this income range, you can afford middle-range housing in Phoenix, Orlando, San Antonio, Minneapolis, Dallas, or Houston. Home prices in these areas range from $169,300 in San Antonio to $194,300 in Phoenix. As for monthly payment, a house in Phoenix may produce a mortgage payment of around $963 per month, while a Houston home, although lower priced, will produce a higher mortgage payment of around $1,144.
According to a Zillow listing, the median price in Houston may just get you a three-bedroom, two-bathroom home that has 2,004 square feet and an attached garage.
If you earn at this level, you earn right around the national median, and you can afford that same mid-level in Philadelphia, where homes at the midrange cost $201,800 (monthly payment of $1,179). If you earn at the higher end of this range, you could buy in Denver, where homes are priced at $288,400 (monthly payment $1,397). Other affordable markets within this income range include Chicago, Baltimore, Sacramento, and Miami.
According to Zillow listings in Denver from this summer, the median price may very well buy you a two-bedroom, two-bathroom 991-square-foot apartment in a high-rise city complex, or it could buy you a quaint two-bedroom, one-bath home. This, of course, depends on your neighborhood preferences.
At the lower end of this range, you can afford the mid-level housing in Portland. With home prices of $271,900 and monthly payments estimated at $1,407, you need to earn roughly $60,308 to afford a middle-of-the-road Portland home.
If you’re closer to the $80,000 range, you can afford a home in Washington, D.C., or Boston, where mid-level homes are priced at $358,900 and $363,200, respectively. Based on Zillow listings in Washington, D.C., this could buy you a one-bedroom, one-bath condo, or a larger townhome. This, of course, depends on where exactly you want to be — closer to the burbs or where the action is.
At this income level, you can afford the more expensive markets like Los Angeles, New York City, and San Diego. In San Diego, the median home price is $438,000 and monthly mortgage payments at this level sit at around $3,000. To be able to afford this, you need to earn an annual income of $98,535.
In San Diego, the median price point may buy you an 1,1oo-square-foot two-bedroom, three-bathroom condo or perhaps a larger, three-bedroom, two-bathroom home.
If you earn at this level, you may just be able to afford to live at the median in San Francisco, where the mid-level home price is $679,800. To be able to afford the roughly $3,200 monthly mortgage, you need an annual salary of $137,129.
Zillow listings indicate that you can afford a two-bedroom apartment or a moderately sized one-bedroom, two-bathroom 1,700-square-foot home.