Here's What You Need To Earn To Own A Home In 50 American Cities

Once a fundamental part of the American dream, the ability to own a home is drifting farther and farther away for many Americans.

But, as Visual Capitalist's Pallavi Rao details below, between skyrocketing prices, stagnating wages, and now rising interest rates, the deck seems to be increasingly stacked against home ownership.

Using May 2023 data tabulated by Home Sweet Home, we map out the annual salary needed to afford a 30-year mortgage (at 6.37%) to buy a home in America’s 50 most populous metropolitan areas.

heres what you need to earn to own a home in 50 american cities

The monthly minimum mortgage payment includes taxes and insurance as well, and is capped at roughly one-third of the income. This analysis also assumes that the homeowner will put down a 20% down payment.

The Least and Most Affordable American Cities to Own a Home

At the top of the list, and at the very west of the country, San Jose is the least affordable city to own a home for the average American.

One would have to earn at least $374,000 a year to afford a $1.6 million dollar home in the city.

To put those numbers into perspective, the median American annual income is $75,000, about one-fifth what’s required to buy a home in San Jose.

Here’s a look at the annual earnings needed to afford a home in all 50 largest cities in the U.S., ranked from least to most affordable.

RankMetro AreaStateMedian Home PriceAnnual Salary
1San JoseCalifornia$1,618,400$373,696
2San FranciscoCalifornia$1,192,600$282,167
3San DiegoCalifornia$880,000$209,110
4Los AngelesCalifornia$746,800$181,106
5SeattleWashington$699,300$170,340
6BostonMassachusetts$644,400$165,239
7New York CityNew York$577,300$160,233
8DenverColorado$636,100$150,622
9Washington, D.C.N/A$557,200$139,911
10MiamiFlorida$560,000$137,574
11PortlandOregon$556,800$136,147
12Riverside/San
Bernardino
California$550,000$133,607
13AustinTexas$467,900$128,995
14SacramentoCalifornia$500,000$125,304
15Salt Lake CityUtah$522,700$122,717
16ProvidenceRhode Island$417,000$112,281
17OrlandoFlorida$419,900$104,772
18DallasTexas$372,400$103,460
19PhoenixArizona$439,700$103,112
20RaleighNorth Carolina$420,000$102,572
21Las VegasNevada$431,400$101,310
22TampaFlorida$390,000$97,387
23MinneapolisMichigan$361,500$94,466
24HartfordConnecticut$314,900$93,861
25CharlotteNorth Carolina$387,200$93,735
26JacksonvilleFlorida$370,000$93,422
27BaltimoreMaryland$357,800$93,378
28NashvilleTennessee$385,800$93,168
29ChicagoIllinois$321,000$92,868
30HoustonTexas$327,000$91,826
31MilwaukeeWisconsin$339,600$89,752
32AtlantaGeorgia$354,300$89,198
33RichmondVirginia$362,300$88,769
34San AntonioTexas$320,500$88,683
35PhiladelphiaPennsylvania$315,300$87,293
36Virginia BeachVirginia$313,200$79,336
37Kansas CityMissouri$291,000$76,147
38ColumbusOhio$284,700$76,133
39IndianapolisIndiana$289,300$71,409
40New OrleansLouisiana$265,200$68,946
41MemphisTennessee$268,600$68,005
42BirminghamAlabama$276,500$67,773
43CincinnatiOhio$252,200$66,260
44BuffaloNew York$206,800$63,386
45St LouisMissouri$231,100$63,260
46DetroitMichigan$227,000$62,758
47LouisvilleKentucky$246,000$62,741
48Oklahoma CityOklahoma$227,300$62,161
49ClevelandOhio$191,400$55,515
50PittsburghPennsylvania$175,000$50,316
 National $371,200$97,204

Other Californian cities, San Francisco (ranked 2nd), San Diego (3rd), and Los Angeles (4th) all require an annual income of at least $180,000 to attempt home ownership within their metropolitan boundaries.

Boston (ranked 6th) and New York (ranked 7th) represent unaffordability on the East Coast, both requiring at least $160,000 a year to buy homes there.

It’s not just the coasts that are expensive however. To buy a home in Denver (ranked 8th) and Salt Lake City (15th) means earning more than $120,000 a year.

However, cities in the Midwest and South, like Pittsburgh, Detroit, Oklahoma City, and Louisville, are far more affordable, requiring less than $63,000 a year to buy a home.

Interest Rates Rock Home Ownership Chances

Aside from the obvious price differences in housing markets, a key factor that has elevated income requirements across the board is the rapid rise in interest rates in the last year. In fact the average 30-year mortgage has pushed past 7%, the highest it’s been since the 2000s.

This means that while the median price of a house in San Jose has actually come down between 2022 and 2023, the minimum monthly payment has increased from $7,717 to $8,720 this year.

CountryAssistance (USD)Top Activity
🇦🇫 Afghanistan$1.5 billionHumanitarian Assistance
🇪🇹 Ethiopia$1.4 billionEmergency Food Assistance
🇯🇴 Jordan$1.3 billionCash Transfer
🇾🇪 Yemen$1.1 billionEmergency Food Assistance
🇸🇸 South Sudan$1.0 billionEmergency Food Assistance
🇨🇩 DRC$891 millionEmergency Food Assistance
🇸🇾 Syria$844 millionHumanitarian Assistance
🇳🇬 Nigeria$828 millionGlobal Health Supply Chain
🇨🇴 Colombia$761 millionCounter-Narcotics
🇸🇩 Sudan$620 millionEmergency Food Assistance

So to afford a median-priced home in the country, an American needs to earn closer to $100,000 a year, up from $75,500 in 2022. And even then, they would be priced out of owning a home in nearly half of the 50 largest cities in the country.

As a result Americans may yet further delay home ownership. Renting is now a far more attractive option, thanks to the biggest difference between rent and mortgages in over 50 years.

Authored by Tyler Durden via ZeroHedge October 23rd 2023