A new survey reported the amount of money first-time buyers must earn to afford the average home – and the median home is affordable for median earners in just four states. Florida is not one of them.
The median-priced home in the U.S. now costs a staggering $332,494, meaning prospective buyers need an annual income of at least $119,769 to afford it with a 10% down payment, according to a new survey from Clever Real Estate, a St. Louis-based real estate company.
That’s about $45,000 more than the typical household earns annually ($74,755). Even with a 20% down payment, home buyers would need to earn at least $98,202, still well above the typical salary.
The last year that the median buyer put down 20% was 1989, according to data from the National Association of Realtors (NAR). Today, the median buyer puts down just 15% of a home’s purchase price.
The median U.S. income earner ($74,755) with 10% down could only afford a home that costs $207,529 — 38% less than the current median-priced home.
As an example, in Orlando, the average worker earns in the lower $50,000 tier. The estimated average salary for City of Orlando employees is around only $42,884 per year, according to salary research (although Mayor Buddy Dyer’s senior staffers make six figures). The report states that in Orlando, first-time buyers need to make $111,364 to afford the average home.
A median-income family aiming to afford a median-priced home would need a hefty 45% down payment, or mortgage rates would need to drop from the current rate of 7.2% to 4% to make it work.
Even with a savings rate of $1,000 each month, it would take a household five and a half years to amass the $66,500 needed for a 20% down payment on a home priced at the median of $332,494.
As it stands, 61% of Americans find themselves priced out of the market even with a 20% down payment.
The median home is affordable for median earners in just four states (West Virginia, Ohio, Iowa, and Indiana) and six of the 50 largest metro areas:
- Pittsburgh, PA
- Cleveland, OH
- St. Louis, MO
- Memphis, TN
- Indianapolis, IN
- Birmingham, AL
Unsurprisingly, Los Angeles is the least affordable city, where buyers need an income of a whopping $249,471 to comfortably afford a median-priced home — nearly three times the actual median income of $87,743.
Read the full report online about how much first-time buyers must make to afford the average home.
Clever Real Estate is a technology company that produces educational real estate content reaching over 10 million readers annually. Since launching in 2017, Clever has reached $8.5 billion in real estate sold, matched 100,000+ customers with realtors, and saved consumers over $160 million on commission fees, according to the company.
