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The Salary Needed to Afford a Home Has Spiked 70% Since 2019
By Adam Hardy MONEY RESEARCH COLLECTIVE
Soaring prices and mortgage rates push homeownership out of reach for average American earners.
In pre-pandemic times, a salary of $67,000 could afford a modest home in most areas of the country. Not anymore.
Americans now need to earn at least $114,000 to be able to buy the typical house, according to a report from Realtor.com released Thursday, marking an increase of 70% in just six years.
“Compared to 2019, the required income has jumped by nearly $47,000,” the report’s authors wrote, “largely driven by home price appreciation and higher mortgage rates.”
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View RatesFor reference, the median salary in the U.S. for full-time workers is roughly $62,000. Such a salary would not be able to afford a home in any of the cities included in Realtor.com’s analysis.
The most affordable city on the list, Pittsburgh, came close. There, median home prices are about $244,000 and require a salary of $64,000.
Realtor.com’s calculations were based on home prices in 50 of the largest metropolitan areas in the U.S., assuming a 30-year fixed mortgage rate, a 20% down payment and no more than 30% of income going toward housing costs. (Given that about half of all new mortgages require private mortgage insurance because the borrower could not make a 20% down payment, that may be a generous assumption.)
According to the Department of Housing and Urban Development, people who spend more than 30% of their income on housing are considered “cost burdened.” About 42 million households — or 1 in 3 families — meet that definition, federal data shows.
By now, Americans are well aware of how pandemic-induced inflation has been eating away at their standard of living. But the Realtor.com report puts the housing affordability crisis in stark new light by focusing on what it realistically takes to keep up with housing inflation of 30% over the past six years.
Where salary requirements for homeownership are the highest
In 23 cities, you’ll need more than a $114,000 salary to buy a home these days.
The required salaries above that benchmark range from $116,000 in the Charlotte, North Carolina, area all the way up to $370,000 for the typical home in San Jose, California.
Here’s a closer look at the 10 most expensive metros in the country.
- San Jose, California: The median listing price is $1.4 million, requiring a $370,000 salary.
- Los Angeles, California: The median listing price is $1.2 million, requiring a $316,000 salary.
- San Francisco, California: The median listing price is $995,000, requiring a $263,000 salary.
- San Diego, California: The median listing price is $980,000, requiring a $259,000 salary.
- Boston, Massachusetts: The median listing price is $878,000, requiring a $232,000 salary.
- New York City, New York: The median listing price is $789,000, requiring a $209,000 salary.
- Seattle, Washington: The median listing price is $782,000, requiring a $207,000 salary.
- Sacramento, California: The median listing price is $634,000, requiring a $167,000 salary.
- Washington, D.C.: The median listing price is $623,000, requiring a $165,000 salary.
- Portland, Oregon: The median listing price is $615,000, requiring a $163,000 salary.
On the flip side, Pittsburgh, as mentioned above, was the most affordable metropolitan area. Detroit was a close second. The salary needed for a typical home in Motown, listed at $254,000, is $67,000.
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Adam Hardy is Money's lead data journalist. He writes news and feature stories aimed at helping everyday people manage their finances. He joined Money full-time in 2021 but has covered personal finance and economic topics since 2018. Previously, he worked for Forbes Advisor, The Penny Hoarder and Creative Loafing. In addition to those outlets, Adam’s work has been featured in a variety of local, national and international publications, including the Asia Times, Business Insider, Las Vegas Review-Journal, Yahoo! Finance, Nasdaq and several others. Adam graduated with a bachelor’s degree from the University of South Florida, where he studied magazine journalism and sociology. As a first-generation college graduate from a low-income, single-parent household, Adam understands firsthand the financial barriers that plague low-income Americans. His reporting aims to illuminate these issues. Since joining Money, Adam has already written over 300 articles, including a cover story on financial surveillance, a profile of Director Rohit Chopra of the Consumer Financial Protection Bureau and an investigation into flexible spending accounts, which found that workers forfeit billions of dollars annually through the workplace plans. He has also led data analysis on some of Money’s marquee rankings, including Best Places to Live, Best Places to Travel and Best Hospitals. He regularly contributes data reporting for Best Colleges, Best Banks and other lists as well. Adam also holds a multimedia storytelling certificate from Poynter’s News University and a data journalism certificate from the Investigative Reporters and Editors (IRE) at the University of Missouri. In 2017, he received an English teaching certification from the University of Cambridge, which he utilized during his time in Seoul, South Korea. There, he taught students of all ages, from 5 to 65, and worked with North Korean refugees who were resettling in the area. Now, Adam lives in Saint Petersburg, Florida, with his pup Bambi. He is a card-carrying shuffleboard club member.