US cities where you need to earn more than $200,000 to pay for a house

The costs of owning a home continue to squeeze all but the wealthiest buyers, with potential homeowners now needing to earn $200,000 or more in eight US cities to afford a typical home, a new study has found.

Mortgage payments in the US have increased an average of 45.6% in the past year. And with interest rates for 30-year fixed-rate mortgages hovering around 7%, homebuyers must spend more just to keep up with rising financing costs, according to a new analysis from the real estate platform. Redfin.

On average, a US homebuyer must earn $107,281 to pay a median monthly mortgage payment of $2,682, which is up from $73,668 a year ago, in October, Redfin finds.

But the costs of owning a home also vary greatly by market, with many cities requiring much more income to pay the monthly mortgage payments on a typical home. Of the 100 largest metropolitan areas in the US, these eight markets ranked as the least affordable, based on income needs.

1.Saint Francis

Median home price: $1,497,000

Income needed to pay for a median priced home: $402,821

2. San Jose, California

Median home price: $1,350,000

Income needed to pay for a median priced home: $363,265

3.Anaheim, Calif.

Median home price: $945,000

Income needed to pay for a median priced home: $254,286

4.Oakland, California

Median home price: $920,000

Income needed to pay for a median priced home: $247,559

5. Los Angeles

Median home price: $823,500

Income needed to pay for a median priced home: $221,592

6.San Diego

Median home price: $790,000

Income needed to pay for a median priced home: $212,577

7. Oxnard, Calif.

Median home price: $782,500

Income needed to pay for a median priced home: $210,559

8.Seattle

Median home price: $763,000

Income needed to pay for a median priced home: $205,312

With a chronic housing shortage and some of the wealthiest residents in the US, California contains many of the most expensive markets to buy a typical home, with seven requiring earnings of $200,000 or more.

New York City was not far behind on the list, ranking 11th overall. To afford a median-priced home in the Big Apple, you’d need an income of $178,942 to keep up with the payments.

For the purposes of the study, mortgage payment affordability assumes that a given homebuyer spends no more than 30% of their income on housing, a common rule of thumb for budgeting.

Median home prices are based on Redfin sales data between October 2021 and October 2022, and median mortgage payments assume buyer made a 5% down payment. Mortgage rates are based on the average rates for October 2021 and October 2022, which are 3.1% and 6.9%, respectively.

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