LAS VEGAS–Just how big the difference is between what’s needed to buy a home in one U.S. market to the next is clearly apparent in a new analysis.
In its most recent quarterly report, HSH.com, which provides information around national mortgage and home equity rates and news, analyzed the annual income required to qualify for a mortgage on a median price home in the country’s 50 largest metropolitan areas.
HSH looked to third-quarter 2022 median sale prices of single-family homes, saying it factored in the industry-standard 28% debt-to-income ratio used to qualify prospective borrowers. In addition, according to the company, a 20% down payment and a fixed-rate, 30-year loan at a rate concurrent with the study were assumed; local property taxes and homeowner’s insurance costs were also included.
HSH said its analysis found that the national median home price was $398,500, requiring a payment of $2,233 a month and a qualifying household income of $95,717 a year. The national median household income, about $70,000 a year, puts this out of reach for most households. HSH said the median home price rose only 9.75% year-over-year in the third quarter of 2022, while in the previous four quarters — Q3-2021 through Q2-2022 — it increased between 14.25% and 16.91%. That change represented “a considerable deceleration,” the report stated.
How Cities Compare
Of the 50 metropolitan areas examined, the most affordable city based on the lowest income requirements was Pittsburgh, where the median home price was $210,250, requiring a monthly payment of $1,283 and an annual income of $55,006. Oklahoma City and Cleveland were just above it on the list of metropolitan areas requiring the lowest annual income to get a mortgage.
At the high end of the scale was San Jose, Calif., where the median home price was $1.688 million requiring a monthly payment of $8,380 and a qualifying annual income of $359,127. San Jose was followed at the high end by two other California cities, San Francisco ($282,117/$6,582) and San Diego ($201,223/$4,695).
Other metro areas with the highest required income include Los Angeles ($200,442/$4,677), Seattle ($169,053/$3,945), Boston ($167,305/$3,904), New York ($162,058/$3,781), and Denver ($148,268/$3,460).
Most Affordable
Following Pittsburgh at the affordable end of the spectrum are Cleveland ($59,867/$1,397), Oklahoma City ($60,671/$1,416), Louisville ($62,952/$1,469), St. Louis ($65,952/$1,521) and Cincinnati ($66,069/$1,521).
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