Homebuyers Need $107,000 Annually to Afford the Typical U.S. Home–Up 46% From a Year Ago

Homebuyers Need $107,000 Annually to Afford the Typical U.S. Home–Up 46% From a Year Ago

by
Updated on January 6th, 2023

Homebuyers across the country need to earn substantially more money than they did a year ago to buy a home, due to high mortgage rates and persistently high home prices. The increases are especially big in Florida. 

A homebuyer must earn $107,281 to afford the $2,682 monthly mortgage payment on the typical U.S. home, up 45.6% from $73,668 a year ago. That’s due to mortgage rates that have more than doubled over the last 12 months, combined with persistently high home prices. 

The average U.S. hourly wage grew by about 5% over that same period, and inflation is also cutting into would-be buyers’ budgets. 

After remaining mostly unchanged for several years, the annual household income necessary to afford a monthly mortgage payment began climbing at the beginning of last year due to the pandemic homebuying boom and rapid rise in prices. Scroll to the end of this report for details on our methodology. 

The income required to buy a home then skyrocketed in 2022 as mortgage rates rose at their fastest pace in history, reaching 7% by the end of October (though rates posted their biggest single-day decline on record on Thursday upon news that inflation cooled). Home prices also continued to increase for much of the year, though they’ve now started declining from their peak and year-over-year growth has now slowed to around 3%

From February 2020 (just before the pandemic started) to October 2022, the monthly payment for an American family buying the median-priced home increased by roughly 70%. Affordability challenges are a major reason why home sales have slowed so dramatically over the last few months. 

“High rates are making buyers rethink their priorities, as many of them can no longer afford the home they want in the location they want,” said Washington, D.C. Redfin agent Chelsea Traylor. “If you had a $900,000 budget a few months ago, rising rates mean it’s now around $700,000–and sellers aren’t dropping their prices enough to make up for the change. So buyers are searching further away from the city in more affordable areas or waiting for prices and/or rates to come down before making a move.”

“I’m encouraging buyers to think long term,” Traylor continued. “Prices are unlikely to fall drastically in the long run, so buying a home now–if you can afford the monthly payment–will still help you build wealth over time, especially if you plan to live in it for several years. Even though rates are high, another advantage of buying now is the lack of competition and opportunity to negotiate with sellers.”

Increases in income required to buy a home are especially eye-popping in Florida

Buyers in North Port, FL need to earn $131,535 annually to afford the metro area’s typical monthly mortgage payment of $3,288. That’s up 73.9% from $75,659 a year earlier, the biggest percent increase of any major U.S. metro. 

It’s followed by Miami, where homebuyers need to earn $128,892, up 63.7% year over year. El Paso, TX ($64,580, up 63.6%), Tampa ($101,682, up 62.4%) and Cape Coral, FL ($104,943, up 60.6%) round out the top five. 

Sixteen of the 20 metros where the income necessary to afford a home has increased most are in the Sun Belt. Sun Belt destinations have long been popular with homebuyers due to their relative affordability and warm weather, and remote work has made them even more popular, driving up prices in the process. Several Florida metros, including North Port and Cape Coral, were hit hard by Hurricane Ian in September, resulting in sharp drops in pending sales and new listings. It remains to be seen whether that will translate to outsized price declines. 

Chicago area, Bay Area had smallest upticks in income necessary to afford a home

Buyers need to earn at least 50% more income to afford a home than they did a year ago in 40 of the 93 metros included in this analysis. They need to earn at least 30% more in all 93. 

Lake County, IL–near Chicago–had the smallest gain in income necessary to afford the median-priced home, though buyers still need 33.5% more than a year ago.

The Bay Area also had smaller-than-average increases, but the income necessary to buy there is still enormous. Buyers need to earn $402,821 to pay San Francisco’s typical $10,071 monthly mortgage payment, up 33.6% from a year ago. It’s followed by San Jose ($363,265, up 36.1%) and Oakland ($247,559, up 36.2%). The increases are smaller in Lake County and the Bay Area than other places because they’re among the only parts of the country where home prices are falling year over year. 

Homebuyers in 45 major metros need $100,000-plus income to afford the typical home

The incomes buyers need to purchase a home in San Francisco and San Jose are the highest in the country, followed by Anaheim, CA, where the typical buyer must earn $254,286 to afford the typical monthly mortgage payment of $6,357 (+42.1% YoY). Oakland and Los Angeles ($221,592, up 40.7%) round out the top five. 

Homebuyers must earn at least $100,000 annually to buy a home in roughly half (45) of the metros in this analysis. That’s up from 16 metros a year ago. 

Detroit requires the lowest income to afford the area’s median-priced home ($48,435), but that’s still up 42.3% from a year ago. It’s followed by Dayton, OH ($51,126, up 46.1%), Cleveland ($53,817, up 45.7%), Rochester, NY ($56,508, up 56.2%) and Pittsburgh ($57,853, up 41.7%). 

Annual income required to afford the median-priced home for sale, October 2022 vs. October 2021

Ranked by largest to smallest year-over–year change

U.S. metro area Annual income required to afford median-price home, October 2022 Annual income required to afford median-price home, October 2021 Year-ove-year change in income required to afford median-priced home Median Sale Price, October 2022 Median Sale Price, October 2021 Monthly Mortgage Payment, October 2022 Monthly Mortgage Payment, October 2021
North Port, FL $131,535 $75,659 73.9% $488,824 $389,075 $3,288 $1,891
Miami, FL $128,892 $78,755 63.7% $479,000 $405,000 $3,222 $1,969
El Paso, TX $64,580 $39,475 63.6% $240,000 $203,000 $1,615 $987
Tampa, FL $101,682 $62,615 62.4% $377,880 $322,000 $2,542 $1,565
Cape Coral, FL $104,943 $65,338 60.6% $390,000 $336,000 $2,624 $1,633
Omaha, NE $75,344 $47,253 59.4% $280,000 $243,000 $1,884 $1,181
West Palm Beach, FL $115,707 $72,922 58.7% $430,000 $375,000 $2,893 $1,823
Charleston, SC $112,451 $70,977 58.4% $417,900 $365,000 $2,811 $1,774
Albuquerque, NM $86,107 $54,448 58.1% $320,000 $280,000 $2,153 $1,361
Knoxville, TN $87,453 $55,420 57.8% $325,000 $285,000 $2,186 $1,386
Fort Worth, TX $97,409 $61,838 57.5% $362,000 $318,000 $2,435 $1,546
Jacksonville, FL $97,651 $62,123 57.2% $362,900 $319,469 $2,441 $1,553
Fort Lauderdale, FL $105,751 $67,574 56.5% $393,000 $347,500 $2,644 $1,689
Orlando, FL $104,943 $67,088 56.4% $390,000 $345,000 $2,624 $1,677
Rochester, NY $56,508 $36,169 56.2% $210,000 $186,000 $1,413 $904
Greensboro, NC $69,693 $44,725 55.8% $259,000 $230,000 $1,742 $1,118
McAllen, TX $60,544 $38,882 55.7% $225,000 $199,950 $1,514 $972
Charlotte, NC $104,405 $67,273 55.2% $388,000 $345,950 $2,610 $1,682
Bridgeport, CT $141,270 $91,395 54.6% $525,000 $470,000 $3,532 $2,285
Grand Rapids, MI $78,035 $50,559 54.3% $290,000 $260,000 $1,951 $1,264
Birmingham, AL $77,362 $50,160 54.2% $287,500 $257,950 $1,934 $1,254
Camden, NJ $79,380 $51,531 54.0% $295,000 $265,000 $1,985 $1,288
Nashville, TN $119,743 $77,783 53.9% $445,000 $400,000 $2,994 $1,945
Indianapolis, IN $75,344 $49,003 53.8% $280,000 $252,000 $1,884 $1,225
Dallas, TX $113,016 $73,505 53.8% $420,000 $378,000 $2,825 $1,838
Hartford, CT $80,726 $52,504 53.8% $300,000 $270,000 $2,018 $1,313
Worcester, MA $107,634 $70,005 53.8% $400,000 $360,000 $2,691 $1,750
Raleigh, NC $115,136 $75,015 53.5% $427,880 $385,768 $2,878 $1,875
Tulsa, OK $68,617 $44,725 53.4% $255,000 $230,000 $1,715 $1,118
Kansas City, MO $80,726 $52,698 53.2% $300,000 $271,000 $2,018 $1,317
Columbus, OH $80,726 $53,139 51.9% $300,000 $273,267 $2,018 $1,328
Greenville, SC $83,416 $55,032 51.6% $310,000 $283,000 $2,085 $1,376
Allentown, PA $76,620 $50,559 51.5% $284,743 $260,000 $1,916 $1,264
Oklahoma City, OK $66,195 $43,753 51.3% $246,000 $225,000 $1,655 $1,094
Providence, RI $111,670 $73,894 51.1% $415,000 $380,000 $2,792 $1,847
Atlanta, GA $99,427 $66,116 50.4% $369,500 $340,000 $2,486 $1,653
Richmond, VA $93,373 $62,226 50.1% $347,000 $320,000 $2,334 $1,556
Tucson, AZ $93,373 $62,226 50.1% $347,000 $320,000 $2,334 $1,556
New Haven, CT $80,726 $53,816 50.0% $300,000 $276,750 $2,018 $1,345
Columbia, SC $66,464 $44,336 49.9% $247,000 $228,000 $1,662 $1,108
New Brunswick, NJ $123,779 $82,645 49.8% $460,000 $425,000 $3,094 $2,066
Houston, TX $88,798 $59,310 49.7% $330,000 $305,000 $2,220 $1,483
San Antonio, TX $87,453 $58,532 49.4% $325,000 $301,000 $2,186 $1,463
Montgomery County, PA $113,016 $75,839 49.0% $420,000 $390,000 $2,825 $1,896
Albany, NY $76,757 $51,531 49.0% $285,250 $265,000 $1,919 $1,288
Bakersfield, CA $95,525 $64,171 48.9% $355,000 $330,000 $2,388 $1,604
St. Louis, MO $63,639 $42,761 48.8% $236,500 $219,900 $1,591 $1,069
Salt Lake City, UT $137,368 $92,367 48.7% $510,500 $475,000 $3,434 $2,309
Las Vegas, NV $110,325 $74,186 48.7% $410,000 $381,500 $2,758 $1,855
Denver, CO $152,639 $103,063 48.1% $567,250 $530,000 $3,816 $2,577
Baton Rouge, LA $68,346 $46,184 48.0% $253,995 $237,500 $1,709 $1,155
Buffalo, NY $61,217 $41,419 47.8% $227,500 $213,000 $1,530 $1,035
Louisville, KY $68,617 $46,475 47.6% $255,000 $239,000 $1,715 $1,162
Milwaukee, WI $73,998 $50,267 47.2% $275,000 $258,500 $1,850 $1,257
Honolulu, HI $198,854 $135,148 47.1% $739,000 $695,000 $4,971 $3,379
Virginia Beach, VA $82,676 $56,373 46.7% $307,250 $289,900 $2,067 $1,409
Phoenix, AZ $121,088 $82,645 46.5% $450,000 $425,000 $3,027 $2,066
Dayton, OH $51,126 $35,002 46.1% $190,000 $180,000 $1,278 $875
Cleveland, OH $53,817 $36,937 45.7% $200,000 $189,950 $1,345 $923
Seattle, WA $205,312 $140,982 45.6% $763,000 $725,000 $5,133 $3,525
Nassau County, NY $164,142 $112,834 45.5% $610,000 $580,250 $4,104 $2,821
Minneapolis, MN $96,602 $66,475 45.3% $359,000 $341,850 $2,415 $1,662
Boston, MA $169,524 $116,665 45.3% $630,000 $599,950 $4,238 $2,917
Portland, OR $145,306 $100,146 45.1% $540,000 $515,000 $3,633 $2,504
Cincinnati, OH $67,271 $46,378 45.0% $250,000 $238,500 $1,682 $1,159
Colorado Springs, CO $121,088 $83,617 44.8% $450,000 $430,000 $3,027 $2,090
Washington, DC $138,579 $96,257 44.0% $515,000 $495,000 $3,464 $2,406
Fresno, CA $104,943 $72,922 43.9% $390,000 $375,000 $2,624 $1,823
Austin, TX $128,354 $89,256 43.8% $477,000 $459,000 $3,209 $2,231
San Diego, CA $212,577 $148,225 43.4% $790,000 $762,250 $5,314 $3,706
Riverside, CA $143,338 $100,146 43.1% $532,688 $515,000 $3,583 $2,504
Tacoma, WA $141,243 $99,173 42.4% $524,900 $509,998 $3,531 $2,479
New Orleans, LA $74,788 $52,533 42.4% $277,933 $270,150 $1,870 $1,313
Detroit, MI $48,435 $34,030 42.3% $180,000 $175,000 $1,211 $851
Anaheim, CA $254,286 $178,901 42.1% $945,000 $920,000 $6,357 $4,473
Chicago, IL $80,726 $56,976 41.7% $300,000 $293,000 $2,018 $1,424
Pittsburgh, PA $57,853 $40,836 41.7% $215,000 $210,000 $1,446 $1,021
New York, NY $178,942 $126,398 41.6% $665,000 $650,000 $4,474 $3,160
Oxnard, CA $210,559 $149,250 41.1% $782,500 $767,518 $5,264 $3,731
Memphis, TN $72,653 $51,531 41.0% $270,000 $265,000 $1,816 $1,288
Warren, MI $72,653 $51,531 41.0% $270,000 $265,000 $1,816 $1,288
Baltimore, MD $91,751 $65,143 40.8% $340,975 $335,000 $2,294 $1,629
Newark, NJ $123,779 $87,885 40.8% $460,000 $451,950 $3,094 $2,197
Los Angeles, CA $221,592 $157,511 40.7% $823,500 $810,000 $5,540 $3,938
Boise, ID $131,852 $94,311 39.8% $490,000 $484,995 $3,296 $2,358
Sacramento, CA $145,306 $105,007 38.4% $540,000 $540,000 $3,633 $2,625
Philadelphia, PA $69,962 $50,559 38.4% $260,000 $260,000 $1,749 $1,264
Frederick, MD $134,543 $97,229 38.4% $500,000 $500,000 $3,364 $2,431
Stockton, CA $134,005 $97,229 37.8% $498,000 $500,000 $3,350 $2,431
Oakland, CA $247,559 $181,818 36.2% $920,000 $935,000 $6,189 $4,545
San Jose, CA $363,265 $266,893 36.1% $1,350,000 $1,372,500 $9,082 $6,672
San Francisco, CA $402,821 $301,409 33.6% $1,497,000 $1,550,000 $10,071 $7,535
Lake County, IL $73,998 $55,420 33.5% $275,000 $285,000 $1,850 $1,386
National $107,281 $73,668 45.6% $398,687 $378,837 $2,682 $1,842

Methodology

This is based on a Redfin analysis that compares median monthly mortgage payments in October 2022 and October 2021. A monthly mortgage payment is considered affordable if the homebuyer spends no more than 30% of their income on housing. 

Monthly median mortgage payments are calculated assuming the buyer made a 20% down payment, and take that month’s median sale price and average mortgage-interest rate into account. The average mortgage rate in October 2022 was 6.9%, while the average rate in October 2021 was 3.1%.

The typical mortgage payments noted in this report include principal, interest, taxes and insurance. In this report, the word “homebuyer” is used to refer to someone who is taking out a loan to finance their purchase. 

Editor’s note: A previous version of this report said the typical mortgage payments were calculated assuming a 5% down payment, and include principal and interest and exclude taxes and insurance. In fact, they were calculated assuming a 20% down payment and they include taxes and insurance. 

Dana Anderson

Dana Anderson

As a data journalist at Redfin, Dana Anderson writes about the numbers behind real estate trends. Redfin is a full-service real estate brokerage that uses modern technology to make clients smarter and faster. For more information about working with a Redfin real estate agent to buy or sell a home, visit our Why Redfin page.

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