SEATTLE, Aug. 20, 2019 /PRNewswire/ -- (NASDAQ: RDFN) — A typical family in the San Francisco area would need to nearly triple their annual income to comfortably purchase a median-priced home. In Detroit, the typical family earns more than twice as much as they'd need to afford a median-priced home. That's according to a new report from Redfin (www.redfin.com), the technology-powered real estate brokerage, that ranks metro areas by the percentage of the local median household income needed to afford a median-priced home. This is based on the assumption that a home is affordable only if it costs less than 30 percent of gross income.
In San Francisco, ranked least affordable, the median household income of $92,714 falls far short of the $265,000 per year needed to afford a median-priced home, which clocks in at $1.42 million.
The five least affordable metros by that measure—percentage of the area's median household income a family would need to buy a local median-priced home—are all in California. In the Anaheim metro, which encompasses Orange County, a household would need to earn $135,554 per year to afford the typical home. That's more than double the area's median household income of $65,331. The story is similar in San Jose, where a household would need to earn more than $215,000 annually to afford the typical home. That's more than double San Jose's median household income. Next come Los Angeles and San Diego, where households need to earn 186 percent and 156 percent of the areas' median household incomes to afford the typical home.
"Many people who make what would seem like a lot of money in most parts of the country cannot afford to purchase a single-family home, townhouse or condo in the Bay Area," said local Redfin agent Kalena Masching. "Home prices are simply unattainable to most prospective homebuyers I meet unless they're willing to commute an hour or two to work every day. Even the residents who could afford to pay more than $7,000 a month for a mortgage payment have a hard time saving for a down payment because rents are so high. A large portion of homebuyers in the area are receiving help with down payments from their family."
At the other end of the spectrum, a family in the Detroit metro would only need to earn $26,690 per year to purchase a home at the area's median price point. That's less than half of the area's $56,339 median income, making it the most affordable metro. It's followed by western New York's Rochester and Buffalo, along with Dayton, Ohio. There are places where families need to earn about $30,000 annually—only about half of each area's median household income—to buy the typical home. Rounding out the top five is Pittsburgh, where households need to earn just over $30,000—much less than the area's median income—to purchase a median-priced home.
"People who live in places like Detroit, Pittsburgh and Cleveland tend to earn lower salaries than people in expensive coastal areas, but in many ways, the midwesterners' quality of life is better. Even though they may make less money, it's easier to purchase a home and build equity while providing for a family," said Redfin chief economist Daryl Fairweather. "It's no secret there's an affordability crisis in high-priced places like the Bay Area, where modest homes can sell for well over $1 million. But in most of the country, homes are still affordable on the typical local income. That's one reason people are looking to move to places like Phoenix, Atlanta and Las Vegas, where homes are affordable on realistic incomes."
An area's overall housing affordability is partly based on the interaction between how much homes cost and how much money people earn. Analyzing just home prices without considering income for a particular area doesn't provide the entire picture of housing affordability, and neither does considering income without its relationship to home prices. Places like San Francisco and San Jose are home to some of the highest median household incomes, but even those aren't nearly enough to afford sky-high housing prices. Contrast that with an area like Bridgeport, Connecticut, where the median household income is nearly as high as it is in San Francisco. But in Bridgeport, the typical home sells for $420,000, putting it within the realm of affordability for the typical earner.
To read the full report, please visit: https://www.redfin.com/blog/median-home-price-to-income.
Redfin (www.redfin.com) is a technology-powered real estate brokerage, combining its own full-service agents with modern technology to redefine real estate in the consumer's favor. Founded by software engineers, Redfin has the country's #1 brokerage website and offers a host of online tools to consumers, including the Redfin Estimate, the automated home-value estimate with the industry's lowest published error rate for listed homes. Homebuyers and sellers enjoy a full-service, technology-powered experience from Redfin real estate agents, while saving thousands in commissions. Redfin serves more than 90 major metro areas across the U.S. and Canada. The company has helped customers buy or sell homes worth more than $85 billion. For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, subscribe here. To view Redfin's press center, click here.