HSH.com has released its latest data report with the salaries required to afford a median-priced home in the top-50 metropolitan areas. The analysis uses the quarterly home price data from the National Association of Realtors and incorporates local property tax and homeowner’s insurance costs.
The most affordable cities include Oklahoma City, Okla., with $38,144, Pittsburgh, Pa., with $38,217, and Cleveland, Ohio, with $40,522, while the least affordable cities are all located in California. The required salary for San Jose is $228,999, San Francisco is $182,486, and Los Angeles is $124,080.
Check out the additional takeaways from the research:
• Lower mortgage rates have been the key for improving affordability. During the third quarter of this year, mortgage rates were materially lower than at the same time last year. Including stated fees, a conforming, 30-year fixed-rate mortgage averaged 3.79% for the period. Last year, that average was 4.69%. Mortgage rates during the third quarter of 2019 were 0.35% lower than in the second quarter and touched three-year lows during the period.
• Lower rates and stronger demand have reignited home prices. After decelerating from over 6% in Q3 last year, the median increase in price across the top 50 metro areas had settled back to 3.83% by the first quarter of 2019. With fresh demand in the market, prices have moved higher again, with the 50-market median increase now back up to 4.85% for the third quarter. Despite the acceleration in prices, affordability improved in 48 of 50 metros on a year-over-year basis and in 47 of 50 markets when compared against the second quarter of 2019.
• Declines in the annual income needed to purchase a median-priced home varied greatly. There were significant decreases in required income in some very expensive markets even though a jumbo mortgage with a higher rate (4.03%) was needed to purchase a median-priced home. For example, we calculated a $27,878.93 year-over-year reduction in the income needed to buy a median-priced home in the San Jose metro area, recorded a $17,539.66 fall compared to last year in the San Francisco metro area and a $9,775.35 decline in the San Diego market. That said, these are still three of the four markets that require the highest income (Los Angeles, the fourth metro of the least affordable group saw a decline of only $5,466.14 compared to 3Q19).
