See below exactly 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 the 50 most populous metropolitan areas.
Key takeaways:
Falling mortgage rates and smaller price increases helped improve the fortunes of potential homebuyers in the first quarter of 2019. On a quarter-to-quarter basis, the income needed to buy a median-priced home declined in all 50 markets we cover.
However, don't get the sense that homes are suddenly getting significantly more affordable, which isn't the case at all. After years of outsized price gains, they are simply getting more expensive more slowly, and a combination of a decline in mortgage rates (and still-rising) incomes have helped to improve the affordability calculation, at least for the first quarter of 2019.
On a quarter-to-quarter basis, the median price of a home sold during the period was lower in 29 major metropolitan areas than in the fourth quarter of 2018. Compared to the second and third quarters of a year, when activity is at it highest, demand for homes is usually slower in the 4th quarter of each year and in the 1st quarter of the next, and so prices tend to soften up a little bit relative to the rest of the year. This is largely due to seasonal effects of holidays and winter weather.
There continue to be some rumblings in the news that in some markets, cooling sales are leading to lower asking prices, or at least more sellers accepting bids below asking price. Three very different metro areas showed year-over-year decreases in median home prices, including Hartford, CT (which has been struggling), San Jose, CA (which is the most expensive market in the country and had been booming) and the Virginia Beach metro area, which seems to have leveled off (it featured just a 0.46% year-to-year decline in median price).
While by no means occurring in every market across the country, there is certainly growing evidence that the rate of annual price increases is in a softening trend in many areas. On a national basis, the current year-over-year increase in the median price of an existing home sold in the first quarter rose just 3.87% compared to the same period in 2018. Looking back over the last five quarters (starting with the first quarter of 2018) the general lessening of price increase is quite evident, as the sequence of increases is 5.64% in 1Q18, then 4.93% in 2Q18, followed by 4.63%, 4.12% and then 3.87% in the latest quarter, respectively.
In his comments, National Association of Realtors Chief Economist Lawrence Yun remarked that “Homeowners in the majority of markets are continuing to enjoy price gains, albeit at a slower rate of growth. A typical homeowner accumulated $9,500 in wealth over the past year,” he said.
Even with somewhat greater purchasing power, potential homebuyers are still faced with a very limited inventory of properties to purchase. According to the NAR, the end of 2019’s first quarter saw 1.68 million existing homes available for sale, 2.4% up from 1.64 million at the end of 2018’s first quarter. Still, that's only about 3.8 months worth of supply, far below the 6 months which is considered to be optimal.
Although inventory levels of homes to buy are expected to continue to improve slightly as we go, market conditions for homebuyers remain a challenge. Even with lower-than-expected mortgage rates available and smaller price increases, affordability remains an issue for many potential buyers, so it may be hard to maintain the general improvement in existing home sales seen in the early part of 2019.
Potential homebuyers of more modest means looking to buy homes often struggle to come up with a downpayment and closing costs, especially in heated markets. Help making the jump to homeownership is often available but is tricky to find if you don't know where to look. To help wanna-be homebuyers, HSH has recently updated its database of Homebuyer Assistance Programs by state, where information about these valuable programs, vital website addresses, contact info and more can be found.
Great website
Did you forget Honolulu is part of the US?
No, but we did remember that current (2018) population estimate for the Urban Honolulu, HI Metropolitan Statistical Area from the Census Bureau sees the area ranked #56 in terms of population. As such, it missed our "top 50" cut off, even though it is historically a very expensive area for housing.
Why is Chicago so cheap, is everyone leaving?
Honolulu Hawaii is shockingly not included in your list. Please add it
I wouldn't go off what the realtor says, you know there is no jobs that pay those salary's around the area...so get ready for a market crash and I mean all over.
NYC @ $419k median home price is an absolutely joke. The median price is double that number, so salary "guesstimate" on this article is half of what would be needed, so you can double that $99k annual salary to $180,000. These numbers are far from accurate. Pass on any data contained here.
If you take the time to check the "metro definitions page" you'll find that the OMB definition of the metro area is quite expansive and well beyond Manhattan and the five boroughs. The area includes the counties of Bronx, Kings, New York, Queens, Richmond, Nassau, Suffolk, Putnam, Rockland, Westchester (NY); Essex, Hunterdon, Morris, Somerset, Sussex, Union, Bergen, Hudson, Middlesex, Monmouth, Ocean, Passaic (NJ); Dutchess, Orange (NY), Pike (PA), and we stand by our calculation (for details, check the "About" slide).
Just wondering what you consider a "home". The claim that the median price of a "home" in Miami is $340,000 makes me think that even studio apartments are counted in this equation. I don't think you can find a home for $340,000 in Miami unless you are including studio apartments. The houses in my Miami neighborhood start at $630,000, while most cost at least $700,000. Studio apartments usually start at $130,000 but can go for much more.
Please know that we don't define a home at all; we use the National Association of Realtors median price for an existing single-family home. Also, as the area included in the calculation covers the entire metropolitan area (Miami-Dade, Broward and Palm Beach Counties) is it certainly likely that homes in the city proper or in your specific neighborhood will be higher, but that's not necessarily the case when you get further away from the center city.
Your definition of Boston extends to places 50 miles away. It's a small concentrated city. Difference between the center and even 20 miles out is sometimes 3 fold.
We don't define the metro areas used in our analysis; rather, we use the definitions as provided by the Office of Management and Budget.
So, Honolulu is the 46th most populous city in the United States, with a metropolitan area boasting a population of 955,000, and is the most expensive to purchase a home (median prices starting at over $650,000). Shouldn't they have been included in this article?
The current (July 2016) population estimate for the Urban Honolulu, HI Metropolitan Statistical Area from the Census Bureau sees the area ranked #54 in terms of population. Even though it is historically an expensive housing area, it misses the cut.
It's fine to say the median price of a home in NEW YORK CITY IS approximately $400,000, but in Manhattan the median price is well over a million and a $100,00 salary really won't cut it unless you bought property decades ago. One East Village building that sold for 2.5 million in the 1980s now has individual apartments for that price. This survey really doesn't tell it like it is.
The calculation includes the entire New York City metropolitan area, not just Manhattan or the five boroughs. Please check the "metro definitions" page for details.
Did you use median homes defined as single family or including condo and coop?
The data from the National Association of Realtors that we use in our calculation covers existing single-family homes only.