[Guest Post] What Do You Need to Earn to Buy a Home in the Largest U.S. Cities

[Guest Post] What Do You Need to Earn to Buy a Home in the Largest U.S. Cities

Guest Author: Sana Ahmad (Click here for Real Estate Listings)

As prices rise, mortgage payments also increase. As a result of the pandemic's nearly three years of strong property appreciation, getting approved for a mortgage is now more challenging than ever. Rising borrowing rates are an additional expense that buyers today must pay.

HSH.com, a source for national mortgage and home equity rates and news, plotted the annual income necessary to qualify for a mortgage on a property with a median price in the 50 largest metropolitan regions in the nation in its most recent quarterly report.

HSH Methodology: The website examined single-family house median selling prices for the third quarter of 2022, accounting for the industry-standard debt-to-income ratio of 28% used to qualify potential borrowers. Local property taxes and homeowner's insurance expenses were also included, along with the assumption of a 20% down payment and a fixed-rate, 30-year loan with a rate contemporary with the research.

It was discovered that the median home price nationwide was $398,500, with a monthly payment of $2,233 and a qualifying household income of $95,717 per year. The majority of households cannot afford this because the national median household income is only about $70,000 per year. 

However, the median home price increased between 14.25% and 16.91% throughout the course of the preceding four quarters, from Q3-2021 to Q2-2022, but only by 9.75% year over year in the third quarter of 2022. According to the assessment, that modification indicated "a considerable slowing."

“The only way affordability can improve is if price increases mellow or prices even retreat. There are some sporadic signs of this in the available data so far, but only on a near-term basis — annual references still point to increases, at least so far,” Keith Gumbinger, a vice president at HSH.com, wrote in an email.

After interest rates have changed since the third quarter ended, the minimum wage needed to buy a home today may not be exactly what was stated above. As a certified realtor and multi-year multi-million producer, please connect with me through my website, so we can find the right home, at the right price, for you and your family to enjoy!