How much salary do you need to earn in order to purchase a median-priced home in your city?
To find out, HSH.com took the National Association of Realtors’ fourth-quarter data for median home prices and HSH.com’s fourth-quarter average interest rate for 30-year, fixed-rate mortgages to determine how much money homebuyers in 25 cities would need to earn in order to afford only the principal and interest payment on a median-priced home in their market.
We used standard 28 percent "front-end" debt ratios, and a 20 percent down payment subtracted from the median home price data to arrive at our figures. There is no doubt that your income will need to be much higher to cover taxes, insurances and other expenses to live in the home, plus any other debts you might have.
While the NAR continues to report strong year-over-year price growth, home prices andmortgage rates retreated from the third to fourth quarter in 2013. While homeowners continue to praise home-price growth as it adds to their equity positions, some homebuyers have actually been stymied by the rapid growth as home prices have been rising faster than incomes.
All in all, the fourth quarter was a great time to buy as lower prices and mortgage ratesincreased affordability, allowing buyers to make less money and still afford a median-priced home in their market.
The last time we ran this calculation was in November 2013 using third-quarter data. Here’s a current look at how much salary you would need to earn in order to afford the median-priced home in your city.
Cleveland: $19,435.17
Mortgage rate: 4.43 percent
- Quarterly change: -0.18 percent
Home price: $112,800
- Quarterly change: -11.18 percent
- Year-over-year change (YOY): +0.1 percent
Monthly payment: $453.49
Salary: $19,435.17
- Quarterly change: -$2,913
Cleveland is the most affordable city on our list once again. Lower home prices and interest rates dropped the required salary by about $3,000 from the previous quarter.
Cincinnati: $22,226.95
Mortgage rate: 4.45 percent
- Quarterly change: -0.21 percent
Home price: $128,700
- Quarterly change: -9.43 percent
- YOY change: +2.6 percent
Monthly payment: $518.63
Salary: $22,226.95
- Quarterly change: -$2,924
Cincinnati remains at number two on our list. While the state of Ohio has struggled with positive consistency in the post-recession era, Cincinnati residents are happy to see positive price growth on a year-over-year basis. Lower mortgage rates and lower prices during the fourth quarter helped reduced the required salary from $25,151 in the third quarter to $22,227 in the fourth quarter of 2013.
St. Louis: $22,397.54
Mortgage rate: 4.41 percent
- Quarterly change: -0.18 percent
Home price: $130,300
- Quarterly change: -9.32 percent
- YOY change: +11.1 percent
Monthly payment: $522.61
Salary: $22,397.54
- Quarterly change: -$2,830
While St. Louis remains in third place, the affordability gap between St. Louis and Cincinnati is tightening. Quarterly declines in rates and prices brought down the required salary by about $3,000 from the previous quarter—similar to both Cleveland and Cincinnati.
Atlanta: $24,390.94
Mortgage rate: 4.38 percent
- Quarterly change: -0.25 percent
Home price: $142,400
- Quarterly change: -6.5 percent
- YOY change: +33.2 percent
Monthly payment: $569.12
Salary: $24,390.94
- Quarterly change: -$2,472
Over the long term, Atlanta home prices have seen a lot of improvement, but as is the case with most of the cities on the fourth-quarter list, recent trends have not been as kind. Current homebuyers in Atlanta aren’t complaining, however. With the largest quarterly rate spread of any metro on the list so far, buyers in Atlanta can make under $3,000 less and still afford the principal and interest payments on a median-priced home.
Tampa: $24,650.88
Mortgage rate: 4.47 percent
- Quarterly change: -0.21 percent
Home price: $142,400
- Quarterly change: -6.19 percent
- YOY change: +3.8 percent
Monthly payment: $575.19
Salary: $24,650.88
- Quarterly change: -$2,279
The affordability spread between Tampa and Atlanta remains tight. With YOY price growth slowing and a quarterly decline of more than 6 percent, affordability has improved, allowing Tampa homebuyers to make over $2,000 less each year.
Orlando: $28,298.47
Mortgage rate: 4.35 percent
- Quarterly change: -0.29 percent
Home price: $165,800
- Quarterly change: -1.19 percent
- YOY change: +19.8 percent
Monthly payment: $660.30
Salary: $28,298.47
- Quarterly change: -$1,333
All things considered, the real estate market in Orlando is looking up. A strong quarterly rate decline, a minimal quarterly price decline and a strong YOY improvement has both homeowners and homebuyers rejoicing in this Florida metro. The quarterly salary decline is approximately $1,300.
San Antonio: $29,305.47
Mortgage rate: 4.35 percent
- Quarterly change: -0.36 percent
Home price: $171,700
- Quarterly change: -1.89 percent
- YOY change: +6.9 percent
Monthly payment: $683.79
Salary: $29,305.47
- Quarterly change: -$1,849
Last quarter, San Antonio’s average mortgage rate was one of the highest on our list. This quarter, it’s one of the lowest. Add to that a small quarterly price decline, and the home of the Alamo saw affordability improve. A lower monthly payment of around $43 means a required salary of $29,305.
Dallas: $29,751.24
Mortgage rate: 4.37
- Quarterly change: -0.28 percent
Home price: $173,900
- Quarterly change: -4.08 percent
- YOY change: +10.6 percent
Monthly payment: $694.20
Salary: $29,751.24
- Quarterly change: -$2,301
Given that mortgage rates and home prices are so similar in Dallas and San Antonio, it makes sense that the required salary in Dallas is just a few hundred dollars more than in its sister city of San Antonio.
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