Home Prices

How Much You Must Earn To Afford A House In The 50 Largest U.S. Cities

Buying a home used to be part of the American dream. It lets you build equity over the years, gives you a significant financial asset, and provides a pride of ownership or investment in the surrounding community. The problem is that in some cities, workers must earn hundreds of thousands of dollars to afford an average-sized home.

Get The Full Series in PDF

Get the entire 10-part series on Charlie Munger in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

We respect your email privacy

Q2 hedge fund letters, conference, scoops etc

Home Prices

We found the numbers behind our latest map from HSH.com, one of the largest publishers of consumer and mortgage information in the country. HSH focused on the 50 most populous metro areas in the country, and figured out the price of the median home for sale. They then calculated monthly principal, interest, property tax and insurance payments buyers have to pay for a 30-year fixed rate mortgage. To keep things simple, they determined what salary would be needed to afford each home using the 28 percent “front-end” debt ratio, meaning the total housing payment could not make up more than 28% of gross income. They also assumed a 20% down payment. We mapped the resulting needed annual salary as a spike on a geographic outline for the metro area.

Top 10 Cities Where You Need to Earn the Most to Afford a Median-priced House

  1. San Jose, CA: $274,623
  2. San Francisco, CA: $213,727
  3. San Diego, CA: $130,986
  4. Los Angeles, CA: $114,908
  5. Boston, MA: $109,411
  6. Seattle, WA: $109,275
  7. New York City, NY: $103,235
  8. Washington, DC: $96,144
  9. Denver, CO: $93,263
  10. Portland, OR: $85,369

Our map reveals three tiers in annual income workers need to earn to afford a median home. First, the West Coast stands out as by far the most expensive market in the country, with 4 out of the top 4 markets in California alone. San Jose, CA is easily the most expensive; workers need to make well over a quarter million dollars to afford a median-priced home. San Francisco is not far behind at $213,727, followed by Sa Diego much further down at $130,986. These numbers indicate the extent to which Silicon Valley has created a massive increase in property values.

The second tier of expensive locales is along the East Coast, led by the familiar hotspots of unaffordable housing like Boston, MA ($109,411), New York City, NY ($103,235) and Washington, DC ($96,144). But there are also other expensive metro areas located along the Atlantic Coast as well, such as Miami, FL ($78,337) and Providence, RI ($75,808). It’s clearly expensive to live somewhere close to an ocean.

The third and final tier of cities where workers don’t need to earn 6-figure salaries stretches across the country’s midsection. Ranging from Minneapolis, MN ($63,962) down to New Orleans, LA ($49,249), there are several metro areas with plenty of relatively cheap housing. A couple of old Rust Belt cities round out the bottom of the list in Cleveland, OH ($39,730) and Pittsburgh, PA ($38,253).

There is one more interesting and overarching trend\ worth noting on our map. Median household income across the US recently reached a record high of $61,400, which is great news for workers. The bad news is that isn’t enough to afford a typical house in 25 out of the 50 cities on our map. Granted, workers in metro areas tend to make more than their rural counterparts, but there is no doubt a real concern about affordable housing in certain urban areas.

Want to find out more about the true cost of living in the US? Check out this interactive tool.

Data: Table 1.1

Article by HowMuch

Saved Articles

The Life and Career of Charlie Munger

Charlie is more than just Warren Buffett’s friend and Berkshire Hathaway’s Vice Chairman – Buffett has actually credited him with redefining how he looks at investing. Now you can learn from Charlie firsthand via this incredible ebook and over a dozen other famous investor studies by signing up below:

  • Learn from the best and forever change your investing perspective
  • One incredible tidbit of knowledge after another in the page-turning masterpiece of a book
  • Discover the secrets to Charlie’s success and how to apply it to your investing
Never Miss A Story!
Subscribe to ValueWalk Newsletter. We respect your privacy.

Congrats! Are you a smart person?

We have an exclusive targeted & limited time offer for being a sophisticated and loyal reader.

ValueWalkPremium is a website and newsletter on the latest industry news much of which is not in the public domain and obtained via our sources.

We also have 10 years of resources on how to use this information to better your investment process.

Sign up for  today and get our exclusive content for 40% off. This is our second biggest discount ever!!

Use coupon code VIP20 or click on the button below

Limited time offer only ENDS 2/29/2019 or after next 25 subscribers take advantage whichever comes first – please do not share this discount with others