After renting property for a while, you may be considering buying next time. The advantages of homeownership are focused around the fact that you now have an asset that can hold or gain value, and be used as a source of equity in the future. Owning a house can also help with peace of mind and creating feelings of stability for the future. There is a major question you must answer before becoming a homeowner, however: Are you secure enough financially to successfully make the big purchase?
There's no one answer to the question of how much monthly income a person needs to earn to become a homeowner, mainly because conditions vary so widely. What other expenses are you dealing with each month? Where are you planning on living? How many other members are there in your family? What size of house suits you needs? Doing this math is an essential part of starting your journey toward homeownership on solid footing.
Differences by region
The differences between markets can be substantial when considering homeownership. Houses that could be out of your price range in high-demand markets may be perfectly affordable elsewhere. HSH recently ran the numbers on relative salary needs around the country and found that conditions are especially tough in a few specific locations. Cities that have been linked to population booms and spikes in demand, such as Seattle, San Francisco and Denver, are very difficult to move into, as are more under-the-radar destinations such as Atlanta, Indianapolis, Las Vegas and Memphis.
HSH ranked the salaries needed to buy a median-priced home in major metro areas and found San Jose, California is by far the hardest place in which to own and buy - you would need a salary of more than $274,000 a year to comfortably move into the median home in San Jose, costing a hefty $1,405,000. San Francisco followed in second place, with San Diego and Los Angeles trailing. California's grip on the top spots is finally broken by Boston at No. 5, where you would have to earn over $109,000 a year to buy the median house.
The national average needed salary is $61,522.46 according to HSH's data. This is far down from the outliers at the top of the list - but if you shop around, you can find places with even lower costs to buy. Among major metropolitan areas, Pittsburgh is the most affordable. A salary of $38,253.29 will be sufficient to comfortably buy the median home there. Pittsburgh is followed by Cleveland, Oklahoma City, Louisville and Indianapolis.
Finding your way
According to Unison's own comparison of homebuying across the country, there are forces other than price determining whether individuals can enter homeownership. For instance, high rent is problematic, because if you're paying a lot every month, there's less left over to save up for your down payment. Student loan debt is another issue afflicting millions of Americans. These are factors to consider when it's time to buy your first home.
Reach out to us about our range of mortgages. We help our customers determine whether the time is right to make a move, then help their dreams of homeownership come true.
Source: HSH
