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Median Homes Require $85k Annual Salary

Posted By Jim On 01/12/2007 @ 8:50 am In The Home | 11 Comments

A nonprofit, the Center for Housing Policy, recently did a research study into the 2007 median home price in 202 of the largest metropolitan areas and discovered that the median home price of $248,000 meant that the owner would need to earn $85,000 a year in order to afford it (based on 10% down and that the owner would pay 28% of his income to the loan). The bigger part of the story is that the increase in home prices has not been matched by an increase in salaries. The study said that to combat higher prices, families have been moving farther away from metropolitan centers or going with cheaper options like condos and townhouses.

Some eye-poppers for you:

  • The median home in the New York metropolitan area was $500,000 – you’ll need to take home over $171,000 per annum to afford that.
  • San Francisco’s median home price of $759,000 would require a salary of over $260,000.
  • Chicago’s median price? $254,000. That would require a salary of $87,000 per year.
  • Cheapest median price goes to Mansfield, Ohio (is that really one of the top 202 largest metropolitan areas?) and that actually is $85,000 (coincidence?), which means you can get by with only making $29,118 a year.

While I think it’s unfortunate that a home costs so much, there’s a reason why they cost that much… people are willing and able to pay for them. I don’t know if the 10% down and 28% per month is a reasonable benchmark anymore because so many people can get 0% down loans and are willing to stretch their budgets to get into a home. Homes will sell for what the market will bear and while the market has softened, it’s still able to support prices that make the median numbers look unreasonable.

Source: CNN Money [3]


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[3] CNN Money: http://money.cnn.com/2007/01/10/real_estate/bc.housing.affordability.reut/index.htm?postversion=2007011010

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