Middle-class homebuyers are struggling.Ursula Page/Shutterstock
- Home prices across the United States have continued to rise, with 93% of metros showing sales price gains, according to the latest quarterly report from the National Association of Realtors.
- Despite a strong economy, homebuying affordability has decreased year-over-year due to a rise in mortgage rates and home prices.
- Buyers in the San Francisco and San Jose metro areas must earn over $200,000 a year to qualify for a mortgage with 20% down.
The United States economy may be doing great, but middle-class homebuyers are still struggling.
Home prices across the US continued to rise in the third quarter of 2018 — 93% of metros had sales-price gains, according to the latest quarterly report from the National Association of Realtors (NAR).
In addition, the supply of available mid-priced homes remains low and mortgage rates went up last quarter, further stifling long-term affordability for middle-class homebuyers, said NAR’s chief economist Lawrence Yun in a press release.
California is a particularly difficult market. The state is home to four of the top-five most expensive housing markets in the country and in the San Francisco and San Jose metro areas, buyers must earn over $200,000 to qualify for a mortgage with 20% down, according to NAR data. It’s no wonder Californians are fleeing to cheaper cities like Boise.
Each quarter, NAR calculates qualifying income requirements for all US metropolitan-statistical areas assuming the buyer puts 25% of gross income toward the mortgage principal and interest. The calculations are done for 5%, 10%, and 20% down payments at a 3.9% interest rate. Metro areas are based on the US Census definitions.
Below, we’ve pulled the qualifying annual income amounts for the 25 largest metros by population, ranked from lowest to highest qualifying income. Detroit and Pittsburgh are not included because of insufficient data.
25. St. Louis, Missouri
Income needed for 20% down: $37,027
Income needed for 10% down: $41,655
24. Atlanta, Georgia
Income needed for 20% down: $45,592
Income needed for 10% down: $51,291
23. San Antonio, Texas
Income needed for 20% down: $47,158
Income needed for 10% down: $53,053
22. Tampa, Florida
Income needed for 20% down: $48,013
Income needed for 10% down: $54,014
21. Houston, Texas
Income needed for 20% down: $48,9678
Income needed for 10% down: $54,975
20. Philadelphia, Pennsylvania
Income needed for 20% down: $48,948
Income needed for 10% down: $55,067
19. Charlotte, North Carolina
Income needed for 20% down: $49,844
Income needed for 10% down: $56,074
18. Dallas-Ft. Worth, Texas
Income needed for 20% down: $53,322
Income needed for 10% down: $59,988
17. Chicago, Illinois
Income needed for 20% down: $53,973
Income needed for 10% down: $60,720
16. Orlando, Florida
Income needed for 20% down: $54,116
Income needed for 10% down: $60,880
15. Phoenix, Arizona
Income needed for 20% down: $55,479
Income needed for 10% down: $62,414
14. Minneapolis-St. Paul, Minnesota
Income needed for 20% down: $55,845
Income needed for 10% down: $62,826
13. Baltimore, Maryland
Income needed for 20% down: $61,216
Income needed for 10% down: $68,868
12. Miami, Florida
Income needed for 20% down: $72,222
Income needed for 10% down: $81,250
11. Riverside, California
Income needed for 20% down: $73,748
Income needed for 10% down: $82,967
10. Portland, Oregon
Income needed for 20% down: $81,235
Income needed for 10% down: $91,389
9. Sacramento, California
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Income needed for 20% down: $84,683
Income needed for 10% down: $75,274
8. Washington, DC
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Income needed for 20% down: $86,667
Income needed for 10% down: $97,500
7. New York-Newark-Jersey City, New York
Income needed for 20% down: $87,114
Income needed for 10% down: $98,004
6. Denver, Colorado
Income needed for 20% down: $91,570
Income needed for 10% down: $103,016
5. Boston, Massachusetts
Income needed for 20% down: $99,972
Income needed for 10% down: $112,468
4. Seattle, Washington
Income needed for 20% down: $102,291
Income needed for 10% down: $115,078
3. Los Angeles, California
Income needed for 20% down: $127,945
Income needed for 10% down: $143,938
2. San Diego, California
Income needed for 20% down: $132,238
Income needed for 10% down: $148,768
1. San Francisco, California
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Income needed for 20% down: $201,205
Income needed for 10% down: $226,356