ST. LOUIS–To comfortably afford the median-priced home ($332,494), first-time buyers need a household income of $119,769, meaning the median home is affordable for median earners in just four states and six of the 50 largest metro areas, according to a new analysis.
Using data from the National Association of Realtors, as well as assuming the first-time homebuyer has a 10% down payment, Clever said its analysis shows first-time buyers must earn $119,769 to comfortably afford that median-priced home, which is about $45,000 more than the typical household earns each year ($74,755).
“With a 20% down payment, the median-priced home is affordable for the median earner in just four states and six of the country's 50 largest metros,” Clever said.
The Findings
According to Clever, its analysis found that of the 50 largest U.S. metro areas, only six have median-priced homes considered affordable for median-income households.
- Pittsburgh is the most affordable metro for home buyers, where comfortably affording the city's median-priced home takes a household income of $59,919. The other most affordable metro areas include Cleveland, St. Louis, Memphis, Indianapolis and Birmingham.
- Los Angeles is the least affordable city for home buyers. It takes an income of $249,471 to comfortably afford a median-priced home.
- West Virginia is the most affordable state. Affording the median-priced home requires an income of about $47,405. The other most affordable states include Ohio, Iowa, and Indiana
- California is the least affordable state. Affording the median home requires a household income of $222,132.
- The median home in the U.S. sells for $332,494, while the typical household earns $74,755.
- The most expensive home most first-time buyers can afford today costs about $207,529 — 38% less than the current median-priced home.
- 61% of Americans cannot afford the median-priced home, even after a 20% down payment.
- If a household saves $500 each month toward a down payment, it will take 11 years to afford a 20% down payment of $66,500 on the typical home.
- For a median-income earner to comfortably afford the median-priced home, they would need a down payment of 45%.
For the full analysis, go here.
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