The median salary needed to buy a home is now $76,000

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A family earning the median national income can no longer afford a typical home in 35 of the nation’s 50 largest cities, according to a new study.

Based on house price data from the first quarter of the year, the salary needed to afford the median home in the United States was nearly $76,000, about $8,500 more than the real income of a typical household, according to an analysis by Visual Capitalism.

The study found that San Jose leads the nation in unaffordable homes, with a median home priced at $1,875,000, requiring a salary of at least $330,758 to pay expected monthly payments of $7,718. .

The top four markets for median home prices were all in California, with San Francisco, San Diego and Los Angeles following San Jose.

New York City ranked seventh on the list with a median home price of $578,100 necessitating an annual salary of $129,458. The Big Apple ranked slightly below Boston, where an income of $130,203 is needed to pay the typical home price of $639,000.

Meanwhile, the median household income across the country was just $67,500, which would be enough to afford a typical home in just 15 of the cities on the list.

Most of the most affordable cities were located in the Midwest. Pittsburgh ranked the most affordable, with a median home price of just $185,700, requiring a salary of just $42,858 to pay monthly payments of $1,000.

In addition to Pittsburgh, a family earning $50,000 a year or less could afford the median house payment in St. Louis, Louisville, Cleveland and Oklahoma City, the study found.

A new study shows the median salary required to pay typical house payments in 50 major US cities. Median home payments are now unaffordable for the typical American family in all but 15 cities

In Houston, the fourth-largest city in the United States, median home prices hit $330,800, requiring an income of $74,673 to make the monthly payments of $1,742.

The largest city in the United States where the typical American could afford the median house price was Columbus, where a salary of $59,320 is sufficient for the median house price of $274,300.

Typical income varies across the country, and cities with the most expensive homes generally have some of the highest average salaries.

Still, median property payments have exceeded median local wages in many cities on the list – a symptom of the broader problem of affordability that has seen prices outpace wages for some time.

Consumer prices have climbed 9.1% over the past year, the largest annual increase since 1981. Housing costs, which account for a third of the consumer price index, rose by 5.6% in June compared to a year ago – although this data is only collected twice a year, and probably behind the real costs.

The new home affordability study assumes a 20% down payment and assumes that no more than 28% of a family’s income will go towards monthly house payments.

The report was based on data from Home Sweet Home for the first quarter of 2021, which pegged the median U.S. home price at $368,200 and the average fixed mortgage rate at 4%.

Home prices and mortgage rates have actually risen since then, meaning the study may even underestimate the salary needed to afford a home in many markets.

The study found that San Jose leads the nation in unaffordable homes, with a median home priced at $1,875,000, requiring a salary of at least $330,758 to pay expected monthly payments of $7,718. .

The study found that San Jose leads the nation in unaffordable homes, with a median home priced at $1,875,000, requiring a salary of at least $330,758 to pay expected monthly payments of $7,718. .

Although the housing market has cooled in recent months, prices continue to rise, albeit at a slower pace than last year

Although the housing market has cooled in recent months, prices continue to rise, albeit at a slower pace than last year

The national median home price jumped 13.4% in June from a year earlier to $416,000. That’s an all-time high in data dating back to 1999, according to the National Association of Realtors.

Last week, the average long-term US mortgage rate stood at 4.99%, the first time it dipped below 5% for the first time in four months.

That’s still nearly double rates seen as recently as January, as the cost of mortgages rose with higher Federal Reserve benchmark rates.

Last week, the Fed raised its main borrowing rate by three-quarters of a point, the second such increase in less than two months, and bringing the key rate to 2.5%, from near zero at the start of the year. the year.

But even as interest rates rise, house prices have yet to come back down after rising faster than wages for some time.

Although the hot real estate market has cooled somewhat, the most recent data has shown that it has continued to rise, with demand outpacing tight supply.

A report from S&P CoreLogic Case-Shiller showed national house prices rose 19.7% in May from a year ago, after jumping 20.6% in April.

National home prices rose 19.7% in May from a year ago, after jumping 20.6% in April

National home prices rose 19.7% in May from a year ago, after jumping 20.6% in April

A report from S&P CoreLogic Case-Shiller showed that home prices continue to rise in 20 major US cities, but increases are starting to slow on the West Coast, where prices are already the highest.

A report from S&P CoreLogic Case-Shiller showed that home prices continue to rise in 20 major US cities, but increases are starting to slow on the West Coast, where prices are already the highest.

Home prices remained up double digits from a year ago in all cities covered by the index, although increases have started to slow in many markets.

Tampa led the way with a 36.1% annual price increase, followed by Miami with a 34% increase and Dallas with a 30.8% increase.

On a yearly basis, Minneapolis saw the smallest increase in home prices from a year ago at 11.5%, followed by Washington DC at 12.2% and Chicago at 12.9%.

“Housing data for May 2022 remained strong as price gains moderated slightly from very high levels,” said Craig J. Lazzara, managing director of S&P DJI.

“However, at the city level, we are also seeing signs of a slowdown. May’s price gains exceeded April’s in just four cities,” he added. “As recently as February of this year, the 20 cities were accelerating.”

The contract rate on a 30-year fixed-rate mortgage averaged 5.54% at the end of July as the Fed's key rate increases

The contract rate on a 30-year fixed-rate mortgage averaged 5.54% at the end of July as the Fed’s key rate increases

In another sign of a slowing housing market, the NAR said last month that pending home sales fell 20% in June from a year ago.

“Contract signings to buy a house will continue to fall as long as mortgage rates continue to rise, as has happened this year so far,” said NAR chief economist Lawrence Yun.

“Home sales will decline 13% in 2022, according to our latest projections,” Yun added, predicting mortgage rates would stabilize at nearly 6% and home sales would begin to rise again in early 2023.

Layoffs in the housing and credit sectors have already begun. Among those that have reported job cuts in recent months are online mortgage company loanDepot, online property broker Redfin and Compass.

The nation’s largest bank by assets, JPMorgan Chase, has laid off hundreds of people from its mortgage unit and reassigned hundreds more.

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