Buying a home in the United States can be quite expensive, with the average person needing to earn just over six figures to afford a typical house. The West is the most expensive region in the country, with residents needing to earn $161,571 on average. In California, the costs are even more stark, with some cities requiring residents to make over $200,000 to afford a typical single detached home.
The most expensive market in the U.S. right now is the San Jose area, where individuals would need to make $468,252 to afford a house, according to a recent National Association of Realtors report. California dominates the list of the most expensive markets, with cities like Anaheim, San Francisco, and San Diego also requiring high incomes to afford a home. Other expensive markets outside of California include Honolulu, Hawaii, Boulder, Colorado, and Naples, Florida.
California’s housing shortage has contributed to the high costs, as demand for homes far exceeds the rate of home construction in the state. Additionally, low interest rates early in the pandemic led to a 40% increase in home prices in the last four years, according to Federal Housing Finance Agency data. Some of the wealthiest people in the country live in California cities like San Jose, San Francisco, and Anaheim, with Atherton being the most expensive ZIP code in the nation.
In contrast to California’s expensive markets, the qualifying income needed to buy a typical home in the U.S. overall is $103,835. It is even cheaper in the Midwest and the South, where the qualifying incomes are $74,967 and $95,511, respectively. The National Association of Realtors calculated qualifying income in each metro market based on median sale prices, a 20% down payment, and a 7.37% interest rate, with the monthly principal and interest payment limited to 25% of a household’s income.
For those looking to make extra money outside of their day job, CNBC offers an online course on How to Earn Passive Income Online, covering common passive income streams, tips to get started, and real-life success stories. Signing up for CNBC Make It’s newsletter can also provide tips and tricks for success at work, with money, and in life. Ultimately, buying a home in the U.S. can be a significant financial investment, with the costs varying depending on the region, market conditions, and individual income levels.
