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The salary you must earn to buy a home in 27 metros

 

How much salary do you need to earn in order to afford the principal, interest, taxes and insurance payments on a median-priced home in your metro area?

Cleveland Pittsburgh St. Louis Cincinnati Detroit Atlanta Tampa Phoenix Orlando San Antonio Minneapolis Dallas Houston Philadelphia Chicago Baltimore Sacramento Miami Denver Portland Seattle Washington Boston Los Angeles New York City San Diego San Francisco

 

Chicago

How much salary do you need to earn in order to afford the principal and interest payments on a median-priced home in your metro area?

To find out, HSH.com took the National Association of Realtors’ second-quarter data for median-home prices and HSH.com’s second-quarter average interest rate for 30-year, fixed-rate mortgages to determine how much of your salary it would take to afford the base cost of owning a home--the principal, interest, taxes and insurance--in 27 metro areas.

We used standard 28 percent "front-end" debt ratios and a 20 percent down payment subtracted from the NAR’s median-home-price data to arrive at our figures.

For the second straight quarter, we've incorporated information on property taxes and homeowner’s insurance costs to more accurately reflect the income needed in a given market. We also included data on Detroit and Pittsburgh for just the second time. Read more about the methodology and inputs on the final slide of this slideshow.

On a national scale, the NAR reported that a smaller number of metropolitan areas saw median-home-price increases in the second quarter as compared with the first. Double-digit price increases in particular were on the decline, according to the NAR. That said, every metropolitan area on our list saw price increases, some much larger than others. Quarterly price increases ranged from as low as 2.21 percent in Phoenix to as high as 25.27 percent in Cleveland.

As for mortgage rates, every metro on our list saw rate declines during the second quarter. The 30-year conforming fixed-rate mortgage sank to 4.17 percent during the week ending May 30, the lowest rate so far in 2014. But falling mortgage rates weren’t enough to balance out the home-price increases in the second quarter, causing the required salary figures to increase in all but two metro areas. And the salary decline in those two metros was less than $100.

Here’s a current look at how much salary you would need to earn in order to afford the principal, interest, taxes and insurance payments on a median-priced home in your metro.

Mortgage rate: 4.20 percent

  • Quarterly change: -0.16 percent

Home price: $139,900

  • Quarterly change: +16.58 percent
  • Year-over-year change (YOY): -0.07 percent

Monthly payment: $772.99

Salary: $33,128.20

  • Quarterly change: +$2,950.42

There’s a new king of affordability: Pittsburgh. The Steel City was second on our list last quarter, and even though the metro exhibited strong quarterly price growth in the second quarter, that didn’t stop Pittsburgh from becoming the most affordable area on our list. Pittsburgh also had the lowest mortgage rates of all the cities we tracked.

Mortgage rate: 4.35 percent

  • Quarterly change: -0.15 percent

Home price: $127,900

  • Quarterly change: +25.27 percent
  • YOY change: +4.24 percent

Monthly payment: $790.57

Salary: $33,881.55

  • Quarterly change: +$4,092.88

Clevelanders have a lot to cheer about these days. First, the Cleveland Browns drafted Johnny Football (Johnny Manziel) No. 1. Then, Lebron James decided to come home and play basketball for the Cavs. Now, Cleveland’s higher home prices have given homeowners in the home of the Rock and Roll Hall of Fame something to get excited about as well. In all the metro areas on our list, Cleveland had the largest home-price increase during the second quarter.

Mortgage rate: 4.38 percent

  • Quarterly change: -0.15 percent

Home price: $147,300

  • Quarterly change: +21.04 percent
  • YOY change: +2.43 percent

Monthly payment: $836.83

Salary: $35,864.16

  • Quarterly change: +$4,013.98

Cincinnati moved down a spot, swapping places with St. Louis from No. 4 to No. 3. But that’s not a knock on the improvements Cincinnati has made. With home prices up over 21 percent in the second quarter, things haven’t gotten cheaper, just more affordable than some of the other metro areas on our list. Strong price growth propelled the required salary higher by more than $4,000.

Mortgage rate: 4.30 percent

  • Quarterly change: -0.10 percent

Home price: $149,900

  • Quarterly change: +24.40 percent
  • YOY change: +4.90 percent

Monthly payment: $840.48

Salary: $36,020.47

  • Quarterly change: +$4,744.99

St. Louis got a bit more expensive, moving a spot higher in the ranking, thanks to quarterly price appreciation that was stronger than Cincinnati’s. St. Louis had the second-highest percentage of quarterly price growth, just behind Cleveland. The result is that homebuyers will need to earn nearly another $5,000 a year to afford a home in the Gateway to the West.

Mortgage rate: 4.41 percent

  • Quarterly change: -0.18 percent

Home price: $136,300

  • Quarterly change: +23.07 percent
  • YOY change: +22.70 percent

Monthly payment: $845.51

Salary: $36,236.03

  • Quarterly change: +$3,985.73

Detroit’s real estate market has been through so much, and yet there’s still a long way to go. But with the kind of price gains that the Detroit metro area has experienced over the short and long term, buyers and homeowners alike should soon see light at the end of the tunnel. By far, the Detroit metro area had the highest figures for both quarter-to-quarter and year-over-year price gains. We want to thank Realcomp for providing us with the Detroit home price data.

Mortgage rate: 4.40 percent

  • Quarterly change: -0.14 percent

Home price: $156,000

  • Quarterly change: +7.59 percent
  • YOY change: +7.07 percent

Monthly payment: $884.64

Salary: $37,913.32

  • Quarterly change: +$1,475.76

Affordability conditions in Tampa improved in the second quarter, moving this metro down a spot on our list. Despite having some of the highest mortgage rates, price gains in Tampa weren’t as high as the competition. Tampa saw a salary boost of nearly $1,500, the smallest salary increase on our list so far. But Tampa homeowners shouldn’t be worried just yet. Despite smaller quarterly price gains, both the quarterly and yearly price figures are remarkably consistent.

Mortgage rate: 4.33 percent

  • Quarterly change: -0.11 percent

Home price: $166,200

  • Quarterly change: +17.12 percent 
  • YOY change: +15.98 percent

Monthly payment: $886.79

Salary: $38,005.28

  • Quarterly change: +$3,821.84

Atlanta continues to exhibit strong year-over-year price gains. Yet when you look at this metro area on a quarterly basis, there’s much more inconsistency. In the first quarter, home prices were down 0.35 percent from the previous quarter, and during the second quarter, prices shot up by over 17 percent, increasing the required salary amount by almost $4,000.

Mortgage rate: 4.28 percent

  • Quarterly change: -0.20 percent

Home price: $198,600

  • Quarterly change: +2.21 percent 
  • YOY change: +8.35 percent

Monthly payment: $962.51

Salary: $41,250.52

  • Quarterly change: -$58.22

Phoenix remains at No. 8 on our list and is the first metro to experience a decline in the required salary figure when compared with the first quarter. Phoenix had the lowest quarterly increase in home prices. If you’re looking to buy a median-priced home in the Phoenix metro area, you will still need to earn over $41,000.

Mortgage rate: 4.26 percent

  • Quarterly change: -0.21 percent

Home price: $182,000

  • Quarterly change: +2.25 percent 
  • YOY change: +12.97 percent

Monthly payment: $1,007.16

Salary: $43,163.95

  • Quarterly change: -$80.00

Just like Phoenix, Orlando saw minimal price gains during the second quarter, allowing the required salary to actually decline modestly. The minimal quarterly price gain coupled with some of the lowest home loan rates on our list, the required salary in Orlando remained within the $43,000 mark.

Mortgage rate: 4.40 percent

  • Quarterly change: -0.22 percent

Home price: $184,200

  • Quarterly change: +8.80 percent 
  • YOY change: +4.96 percent

Monthly payment: $1,080.45

Salary: $46,304.97

  • Quarterly change: +$1,798.97

San Antonio is the most affordable Texas metro we measure. But the hefty decline in mortgage rates wasn’t enough to counterbalance the home-price increase in the San Antonio metro during the second quarter, resulting in a required salary that was nearly $2,000 higher than it was just a quarter ago.

Mortgage rate: 4.34 percent

  • Quarterly change: -0.18 percent

Home price: $212,900

  • Quarterly change: +13.12 percent
  • YOY change: +6.66 percent

Monthly payment: $1,149.30

Salary: $49,255.87

  • Quarterly change: +$3,523.48

Minneapolis is the first metro area to crack the $200,000 home-price mark. With a strong quarterly price gain of over 13 percent, the required salary jumped over $3,500 to an annual figure a shade under $50,000.

Mortgage rate: 4.36 percent

  • Quarterly change: -0.12 percent

Home price: $191,300

  • Quarterly change: +9.44 percent 
  • YOY change: +5.23 percent

Monthly payment: $1,169.07

Salary: $50,102.98

  • Quarterly change: +$2,394.21

Unfortunately for homebuyers in the Dallas metro, a mortgage rate decline of only 0.12 percent (one of the smallest declines on our list) was nowhere near enough to offset the home price boost of 9.4 percent, resulting in a required salary figure that’s about $2,400 higher than the previous quarter.

Mortgage rate: 4.34 percent

  • Quarterly change: -0.15 percent

Home price: $204,000

  • Quarterly change: +10.51 percent 
  • YOY change: +7.94 percent

Monthly payment: $1,208.26

Salary: $51,782.56

  • Quarterly change: +$2,745.96

Houston, the most expensive Texas metro on our list, closely mirrors Dallas, but higher home prices and stronger second-quarter price appreciation kept Houston on top. Price gains, over the short and long term, have been the deciding factor in making Houston’s real estate market more expensive than the Dallas and San Antonio regions.

Mortgage rate: 4.38 percent

  • Quarterly change: -0.14 percent

Home price: $227,200

  • Quarterly change: +12.59 percent
  • YOY change: 0.00 percent

Monthly payment: $1,267.54

Salary: $54,323.02

  • Quarterly change: +$3,776.77

Affordability in local real estate markets is a moving target. Just look at the Philadelphia metro, for example. During the first quarter, home prices declined nearly 6 percent and lowered the required salary by nearly $2,000. In the second quarter, a home-price gain of over 12.5 percent increased the required salary by almost $4,000.

Mortgage rate: 4.29 percent

  • Quarterly change: -0.15 percent

Home price: $255,600

  • Quarterly change: +13.85 percent
  • YOY change: -2.70 percent

Monthly payment: $1,345.60

Salary: $57,668.41

  • Quarterly change: +$4,589.90

Baltimore is the second of three metro areas on this list which experienced negative year-over-year price appreciation. That said, a quarterly price increase of just under 14 percent sent the required salary figure higher by nearly $4,600.

Mortgage rate: 4.36 percent

  • Quarterly change: -0.16 percent

Home price: $218,000

  • Quarterly change: +23.23 percent 
  • YOY change: +8.30 percent

Monthly payment: $1,384.03

Salary: $59,315.49

  • Quarterly change: +$6,448.60

Buying a home in the Chicago metro area became significantly more expensive during the second quarter, moving the Windy City up a spot on our list. A couple of the increases here are staggering: The quarterly price jumped more than 23 percent and the required salary bumped up nearly $6,500.

Mortgage rate: 4.37 percent

  • Quarterly change: -0.18 percent

Home price: $271,000

  • Quarterly change: +5.94 percent 
  • YOY change: +14.35 percent

Monthly payment: $1,394.83

Salary: $59,778.52

  • Quarterly change: +$1,664.65

Price improvements have moderated some in the Sacramento metro area, at least compared with a year ago. Despite an interest-rate decline of 18 basis points, home prices increased enough to move the required salary figure higher by over $1,600 from the first quarter to the second.

Mortgage rate: 4.37 percent

  • Quarterly change: -0.16 percent

Home price: $270,000

  • Quarterly change: +4.25 percent
  • YOY change: +7.57 percent

Monthly payment: $1,418.07

Salary: $60,774.40

  • Quarterly change: +$1,040.17

Things are quiet in Miami? When are things ever quiet in Miami? Relatively speaking, the Miami metro real estate market has been quiet with stable home-price appreciation and a decline in mortgage rates that lands it in the middle of the pack on our list. With strong interest from international homebuyers, it's expected that Miami will continue along with moderate changes in both rates and prices.

Mortgage rate: 4.38 percent

  • Quarterly change: -0.19 percent

Home price: $286,200

  • Quarterly change: +5.26 percent 
  • YOY change: +8.33 percent

Monthly payment: $1,439.81

Salary: $61,706.20

  • Quarterly change: +$1,398.49

Portland’s price appreciation was not as strong as Denver’s, causing the two metros to swap places on our list this time around. The median home price in the Portland metro during the second quarter was over $30,000 cheaper than Denver’s. Since the NAR expects strong sales growth in the Portland area during the third quarter, the Denver-Portland price gap could shrink to first-quarter levels.

Mortgage rate: 4.36 percent

  • Quarterly change: -0.17 percent

Home price: $316,300

  • Quarterly change: +9.67 percent
  • YOY change: +10.40 percent

Monthly payment: $1,485.50

Salary: $63,664.45

  • Quarterly change: +$3,771.99

Housing conditions in the Denver metro area got a bit more expensive in the second quarter, moving the Mile High City up one spot on our list. The Denver area has been a model of real estate consistency for a while now. Just look at both the quarterly and YOY home-price-appreciation numbers. Very few metros on this list have figures that consistent.

Mortgage rate: 4.28 percent

  • Quarterly change: -0.31 percent

Home price: $357,400

  • Quarterly change: +5.15 percent
  • YOY change: +3.35 percent

Monthly payment: $1,742.41

Salary: $74,674.89

  • Quarterly change: +$823.83

Since we’ve said it here each and every time, we’ll say it again, “Here is where things start to get expensive.” For all the metro areas in which the required salary increased in the second quarter (all but two), Seattle had the smallest salary increase at $823.83 (just under Los Angeles at $836). A hefty quarterly decline in the Seattle metro’s mortgage rates (-0.31 percent) and a moderate quarterly price increase kept this metro area surprisingly stable.

Mortgage rate: 4.31 percent

  • Quarterly change: -0.16 percent

Home price: $398,100

  • Quarterly change: +9.61 percent
  • YOY change: +4.16 percent

Monthly payment: $1,973.35

Salary: $84,572.32

  • Quarterly change: +$4,752.31

The Boston metro area was more affordable in the second quarter than in the first. With a median-home price and quarterly price growth just under that of the Nation’s Capital, it’s not surprising to see Bean Town move up one spot in the affordability category.

Mortgage rate: 4.30 percent

  • Quarterly change: -0.15 percent

Home price: $403,600

  • Quarterly change: +12.45 percent
  • YOY change: +0.15 percent

Monthly payment: $1,983.31

Salary: $84,999.14

  • Quarterly change: +$6,495.58

Washington, D.C., moved down one spot in the affordable ranks, swapping spots with Boston, as stronger home-price appreciation from the first to second quarter decreased affordability. The NAR expects D.C.’s strong price appreciation to continue into the third quarter, as D.C. was listed as a one of the 10 metros that are beating the national averages in terms of price appreciation, inventory growth and home sales. That shouldn’t come as a surprise especially since Washington, D.C. was voted America’s “coolest” city by Forbes.

Mortgage rate: 4.33 percent

  • Quarterly change: -0.19 percent

Home price: $420,300

  • Quarterly change: +3.47 percent
  • YOY change: +11.07 percent

Monthly payment: $2,025.34

Salary: $86,800.40

  • Quarterly change: +$835.53

Los Angeles, the second of the four California metros on our list, remained far more stable than San Diego and especially San Francisco. The required salary increased only $836 in the second quarter, the second lowest increase for metros that adjusted on the positive side of the ledger.

Mortgage rate: 4.38 percent

  • Quarterly change: -0.15 percent

Home price: $396,700

  • Quarterly change: +4.04 percent
  • YOY change: -0.80 percent

Monthly payment: $2,098.59

Salary: $89,939.45

  • Quarterly change: +$1,475.69

New York City is the third metro area on our list to have home prices depreciate on a year-over-year basis. But New York metro homeowners shouldn’t be too discouraged since the decline amounted to less than 1 percent. Currently, the way home price trends are shaping up in the New York metro area, we wouldn’t be surprised to see the median-home price crack the $400,000 mark by the time the third-quarter data is released.

Mortgage rate: 4.35 percent

  • Quarterly change: -0.21 percent

Home price: $504,200

  • Quarterly change: +4.39 percent
  • YOY change: +7.51 percent

Monthly payment: $2,335.47

Salary: $100,091.74

  • Quarterly change: +$1,557.52

San Diego is once again the second most-expensive California metro on our list and the second most-expensive metro (overall) on our list. The required salary during the second quarter did jump about $1,500, but believe it or not, that figure is actually on the lower end of the scale this time around.

Mortgage rate: 4.26 percent (jumbo rate)

  • Quarterly change: -0.13 percent

Home price: $769,600

  • Quarterly change: +13.21 percent
  • YOY change: +8.96 percent

Monthly payment: $3,511.94

Salary: $150,511.88

  • Quarterly change: +$13,382.33

San Francisco home prices made national news this summer when DataQuick reported that the median home price in San Francisco reached the $1 million mark. While the NAR’s home price figures never made it that high, it was still more than enough to propel the required salary in the San Francisco metro area over $50,000 higher than its closest competition--San Diego.

For the results presented on these pages, and incorporating the information discussed below, HSH.com calculated the annual before-tax income required to cover the mortgage's principal, interest, tax and insurance payment. We used standard 28 percent "front-end" debt ratios and a 20 percent down payment subtracted from the median-home-price data to arrive at our figures. Loans with less than a 20 percent down payment will incur mortgage insurance, which would in turn increase the required salary.

We utilized the NAR’s 2014 second-quarter data for median home prices as well as our 2014 second-quarter average interest rate for a 30-year, fixed-rate mortgage to determine how much money homebuyers in 27 major metro areas would need to earn in order to purchase the median-priced home in their market.

The average mortgage rate information we utilized was for purchase-money mortgages made to borrowers with good to excellent credit.

We created metropolitan-area average property tax information from data made available from the Tax Foundation (http://www.taxfoundation.org), a non-partisan research think tank, based in Washington, D.C.

We utilized statewide average homeowner insurance premium costs made available by the Insurance Information Institute (http://www.iii.org), whose mission is to improve public understanding of insurance - what it does and how it works.

Note: Property taxes and insurance costs are specific to an individual property itself and will be different for any single property in which you may have an interest. Also, if other personal debts exceed 8 percent of a given monthly gross income, this will increase the salary needed to qualify.

Data for the Pittsburgh metro area was provided by RealSTATs, a locally owned and operated real estate information company. Home-price data for Detroit was provided by Realcomp II Ltd., Michigan’s largest Multiple Listing Service.

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Cities 30-Year Fixed Mortgage Rate % Change from 1Q14 Median Home Price % Change from 1Q14 Monthly Payment (PITI) Salary Needed
Pittsburgh 4.20% -0.16% $139,900 +16.58 $772.99 $33,128.20
Cleveland 4.35% -0.15% $127,900 +25.27 $790.57 $33,881.55
Cincinnati 4.38% -0.15% $147,300 +21.04 $836.83 $35,864.16
St Louis 4.30% -0.10% $149,900 +24.40 $840.48 $36,020.47
Detroit 4.41% -0.18% $136,300 +23.07 $845.51 $36,236.03
Tampa 4.40% -0.14% $156,000 +7.59 $884.64 $37,913.32
Atlanta 4.33% -0.11% $166,200 +17.12 $886.79 $38,005.28
Phoenix 4.28% -0.20% $198,600 +2.21 $962.51 $41,250.52
Orlando 4.26% -0.21% $182,000 +2.25 $1,007.16 $43,163.95
San Antonio 4.40% -0.22% $184,200 +8.80 $1,080.45 $46,304.97
Minneapolis 4.34% -0.18% $212,900 +13.12 $1,149.30 $49,255.87
Dallas 4.36% -0.12% $191,300 +9.44 $1,169.07 $50,102.98
Houston 4.34% -0.15% $204,000 +10.51 $1,208.26 $51,782.56
Philadelphia 4.38% -0.14% $227,200 +12.59 $1,267.54 $54,323.02
Baltimore 4.29% -0.15% $255,600 +13.85 $1,345.60 $57,668.41
Chicago 4.36% -0.16% $218,000 +23.23 $1,384.03 $59,315.49
Sacramento 4.37% -0.18% $271,000 +5.94 $1,394.83 $59,778.52
Miami 4.37% -0.16% $270,000 +4.25 $1,418.07 $60,774.40
Portland 4.38% -0.19% $286,200 +5.26 $1,439.81 $61,706.20
Denver 4.36% -0.17% $316,300 +9.67 $1,485.50 $63,664.45
Seattle 4.28% -0.31% $357,400 +5.15 $1,742.41 $74,674.89
Boston 4.31% -0.16% $398,100 +9.61 $1,973.35 $84,572.32
Washington 4.30% -0.15% $403,600 +12.45 $1,983.31 $84,999.14
Los Angeles 4.33% -0.19% $420,300 +3.47 $2,025.34 $86,800.40
New York City 4.38% -0.15% $396,700 +4.04 $2,098.59 $89,939.45
San Diego 4.35% -0.21% $504,200 +4.39 $2,335.47 $100,091.74
San Francisco 4.26% -0.13% $769,600 +13.21 $3,511.94 $150,511.88

30 Yr. Fixed - Purchase Rates from Our Lenders in Virginia

Lenders
Rate
APR
Monthly Payment
Capital One
3.750%
3.973%
$926
Last Updates: 11/23/2014 See More Rates