You’ve heard that it’s a tough time to buy a house, but exactly how tough is it?
A pair of recent studies predicts that you’d need to earn more than $100,000 per year to comfortably afford a typical home in much of the U.S. right now.
That’s a major jump from just four years ago, and it comes at a time when fewer homes are on the market and mortgage rates and housing prices have been high. House hunters, meanwhile, haven’t seen their wages increase at the same pace.
“Housing costs have soared over the past four years as drastic hikes in home prices, mortgage rates and rent growth far outpaced wage gains,” Zillow senior economist Orphe Divounguy said in a statement.
The six-figure threshold
A Zillow analysis released in February found that prospective homeowners would have to earn more than $106,000 annually to be able to buy a typical home in the U.S.
That’s an 80% increase from the $59,000 yearly income the website predicted a household would need to comfortably afford a home in 2020.
In a separate study released Monday, the financial website Bankrate suggested Americans would have to rake in $110,871 per year to afford a median-priced home, which the outlet says costs $402,343. That income level surged nearly 50% from its 2020 estimate.
“Home values are near record highs, and if you want a house, you have little choice but to pay a high price,” Bankrate housing market analyst Jeff Ostrowski said.
The national median household income, according to data from the U.S. Census Bureau, is around $74,500.
Location, location, location
Of course, those figures are based on national data, and home prices vary depending on where you want to live.
Bankrate found that aspiring homeowners in 22 states and Washington, D.C., should earn at least $100,000 per year to afford a typical home. Buyers in the South and Midwest require less to pay for new digs than those in the West and Northeast.
Still, the 22 states requiring a six-figure income is an increase from the only six states (and D.C.) where that much money would have been necessary to buy a typical house in 2020.
The states that saw the largest increase in the annual income necessary to buy a typical home were Montana, Utah, Tennessee, South Carolina and Arizona.
In Seattle, New York City, Boston and four major metro areas in California — San Jose, San Francisco, Los Angeles and San Diego — prospective households would have to earn more than $200,000 per year to afford a typical home, according to Zillow.
Memphis, Cleveland, New Orleans and Birmingham were among the most affordable cities.
But Zillow found only three major metro areas in the U.S. where homebuyers making the median income could afford a typically priced home: Pittsburgh, St. Louis and Detroit.
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