Can You Afford Your Next Home?
By: Nicholas Bianco
Legal Assistant at Miller Law Group, PC
Have you ever wondered how much you can spend on a house with your income? Here’s a great article by the Washington Post on the housing market across the nation. The map shows what your income should be in order to get a median house in these cities if you put 20% down. As you can see there is a major difference for what your income should be about if you live in the Washington D.C area compared to that of San Francisco. This article just gives you some insight on the housing market in different parts of the nation. If you are looking to buy a house in the future try to keep these prices in mind when you are searching. You would also want to make sure you have a good mortgage loan officer to help guide you through the process.
Map: The salary you need to buy a home in 27 U.S. cities
By Ana Swanson March 8, 2015
This post comes via Know More, Wonkblog’s social media site.
Here’s definitive proof that San Francisco’s real estate market is insane. HSH.com, a mortgage research site, has estimated how much salary you need to earn to afford the principal, interest, taxes and insurance payments on a median-priced home in 27 metro areas.
On a national scale, a buyer who puts 20 percent down would need to earn a salary of $48,604 to afford the median-priced home in America. But that total varies a lot from city to city. Pittsburgh, Cleveland, St. Louis and Cincinnati rank as the most affordable metros in which to buy a new home – HSH.com estimates that you can buy the median home while making less than $34,000 – while New York, Los Angeles and San Diego are at the high end, requiring salaries of nearly $90,000 or more. But the most expensive city by far is San Francisco, where the site estimates you would need to make $142,448 to buy the median home in the area.
The site’s calculations assume that a buyer spends 28 percent of gross monthly income on housing, including principal, interest, taxes and insurance, (in line with industry guidelines for standard “front-end” debt ratios) and makes a 20 percent down payment on a house. To calculate the cost of buying the median-priced house in a given urban area, HSH.com combines its own average interest rate for 30-year, fixed-rate mortgages in the fourth quarter; the National Association of Realtors’ data on median-home prices in the fourth quarter; average metropolitan property tax data from the Tax Foundation, a Washington-based think tank; and statewide average homeowner insurance premium costs from the Insurance Information Institute, an industry organization.
The data is, of course, an estimate — for one, property taxes and insurance costs will vary depending on the property — but it gives you a good idea of how housing costs varied around the country in the fourth quarter. You can read more about the methodology and see the site’s data here.