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

7 Replies

I found this report interesting and it speaks to the affordability of many markets as well. 

http://www.hsh.com/finance/mortgage/salary-home-bu...

There were also some surprises at least for me. For instance, Ohio was more affordable than Detroit and Atlanta is still affordable despite the fact that most posts I have seen seem to imply it has already run up. Obviously, using the median home price is dangerous for some markets as many metro markets have good and really bad areas but it still might be interesting. 

How are you making the decision on affordability?

@Bob Bowling

I am not the article is. It looks like they are comparing PITI to salaries.

this seems off to me, NYC is cheaper than LA?

Originally posted by @Charles Worth :

@Bob Bowling

I am not the article is. It looks like they are comparing PITI to salaries.

 I don't see anywhere they mentioned affordability.  You are the one mentioning affordability, right?  To me they would have to address how many people make those salaries to make any kind of affordability statement.  In San Francisco $200,000 is not an uncommon household income.  

Well they do say how much salary it takes to AFFORD a certain payment but that doesn't speak to how most people determine a markets affordability to it's population.

@Bob Bowling

 no it is mentioned in the website many times for instance,

San Francisco remains the king of inaffordability because of its home prices. The home-price gap between the San Francisco metro and the San Diego metro is nearly $250,000 and a whopping $607,900 compared with our most affordable metro. Sure, falling rates and stable home prices helped the region this quarter, but you still need to earn over $142,000 just to afford a median-priced property in the area. Remember, in the city itself, a one bedroom condo can easily run you upwards of $900,000.

Also, based on the article that is obviously what they are trying to get at. Now if we want to talk about how right the article is that is a different story. I can think of many reasons this is not really a good analysis when you drill down just like a rule of thumb should not be relied upon blindly. For instance, NYC has a ton of people who trade equity in their homes for another home as well as people being supported by outside money so its not really relevant in many NYC areas. Also, in SF cash pay is dwarfed by equity-based compensation which I doubt is factored in. However for the middle markets it might be a more interesting analysis. 

@Ken T.

 There are so many factors that could influence this. For instance, its not comparing sq feet just median price, payments and salary so you likely get more for your money in LA even if the median price might be higher.  As I said I would think it would be tough to say which market is really more affordable between LA, SF and NYC due to the factors in each and that salary is probably not the best mesure. 

Originally posted by @Charles Worth :

@Bob Bowling

  Now if we want to talk about how right the article is that is a different story. I can think of many reasons this is not really a good analysis when you drill down just like a rule of thumb should not be relied upon blindly.  

That was basically my point.  The article is just a flawed piece trying to infer something that is not true hoping it is parroted by others that want to spread incorrect information.  Houses cost MORE in San Francisco BECAUSE people can afford them.  Obviously in Podunk, not so much. 

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