FOSTER CITY, Calif.,
Feb. 26, 2020 /PRNewswire/
-- HSH.com announces today its latest analysis of the salary
required to buy a median-priced home in the 50 top metropolitan
areas. A premiere consumer destination for mortgage information and
rate shopping since 1979, HSH offers a wealth of free tools and
expertise for homeowners and homebuyers.
The newly-updated report uses the latest quarterly home price
data from the National Association of Realtors (NAR), incorporates
local property tax and homeowner's insurance costs, and calculates
the income needed to qualify for a median-priced home in each
market. The latest research will help potential homebuyers evaluate
whether or not they can afford to buy a home in their market.
For the fourth quarter of 2019, the latest research reveals
affordability in most metro areas improved a bit again as compared
to the fourth quarter of 2018, as lower mortgage rates served as a
powerful offset to again-surging home prices.
Compared to the same period last year and due solely to lower
mortgage rates in the quarter, the income needed to purchase a
median-priced home decreased in 49 of the 50 major metropolitan
areas HSH reviewed. The Philadelphia metro area was the only outlier,
posting a small increase. On a quarter-to-quarter basis,
typically lower home prices in the fourth quarter compared to the
third saw a majority of markets require lower incomes needed to
purchase a median-priced home.
The most and least affordable metro areas in
the salary analysis (assuming a 20% downpayment):
Most affordable
metropolitan area
|
Required salary
per year to afford a median-
priced home
|
1.
Pittsburgh
|
$36,581.61
|
2. Oklahoma
City
|
$37,831.74
|
3.
Cleveland
|
$39,146.04
|
|
|
Least affordable
metropolitan areas
|
Required salary
per year to afford a median-
priced home
|
1. San
Jose
|
$227,232.05
|
2. San
Francisco
|
$184,742.64
|
3. San
Diego
|
$122,695.23
|
Salary calculations
using a 10% downpayment and including PMI are also provided for
each area.
|
Main takeaways from the updated research:
- Mortgage rates lower than last year improved or preserved
affordability. During the fourth quarter of 2019,
mortgage rates were significantly lower than at the same time the
previous year. Including stated fees, a conforming, 30-year
fixed-rate mortgage averaged 3.85% for the period. In the fourth
quarter of 2018, that average was 4.90%, the peak for the economic
cycle so far and the highest since the first quarter of 2011.
- Lower rates, stronger demand and limited inventory to buy
have re-ignited home prices. High mortgage rates of a
year-ago damped demand and slowed the years-long increase in prices
to only a moderate level of 3.91% by the beginning of 2019. Since
then, in the last three quarters, national median home prices have
risen 4.29% in the second quarter, 5.07% in the third and now 6.55%
in the fourth. While the San Jose,
CA and Oklahoma City, OK
metros saw small price declines compared to a year-ago, the
remaining 48 markets saw annual price increases that ranged as high
as 9.81% in the Charlotte, NC
metro area.
- The trend in improving affordability isn't likely to last
more than another quarter. Mortgage rates have been slightly
lower in the first quarter of 2020 and so will still favorably
compare to year ago levels, but the dramatic differential in rates
will diminish from one of greater than a full percentage point for
the 4Q18-4Q19 comparison to much less than that in the next quarter
or two. Meanwhile, while home price changes for the first quarter
of each year are often a mixed bag, the second quarter has seen
unambiguously higher prices in each of the last four years, and
there is no reason to expect anything different this year.
- Declines in the annual income needed to purchase a
median-priced home varied greatly. While the median
decline in income needed across all markets fell by $2,675.61, metros such as San Jose saw a nearly 11% decline in the
salary needed to purchase a median-priced home in the fourth
quarter of 2019 compared to 2018, but even with a $27.603.69 decrease in income needed, that wasn't
sufficient to improve affordability very much in the most expensive
market we track. The smallest decrease posted by a market was
Memphis, TN with a $961.41 fall, some 2.32% lower than the same
period last year, and just one market (the Philadelphia, PA metro area) posted an
increase in the annual salary needed, but this was just
$161.16 (0.27% more than 4Q18).
- The "spring homebuying season" is shaping up to be the most
challenging one yet in a string of them. In terms
of current conditions, mortgage rates have been relatively flat at
low levels since late last summer, and home sales have generally
been firming since. This has depleted inventories of homes
available to buy recently to 20-year lows, with the combination of
more demand and less supply igniting home prices. Without
more supply, many potential homebuyers will not find a home they
can buy available to them this spring.
- Improving housing affordability due to lower mortgage rates
masks one significant impact of rising home prices. A
borrower's downpayment is typically a percentage of the home's
purchase price, and stronger increases in home prices means
borrowers need to save more (and more quickly) in order to maintain
a given down payment. For example, a borrower with enough
cash on hand to make a downpayment for a median-priced home last
year would need about 6.5% more savings this year just to keep
pace, and that can be a little like running on a treadmill,
especially for first-time and low-and-moderate income
homebuyers.
Despite relative improvements in affordability, potential
homebuyers of more modest means looking to buy homes often struggle
to come up with a downpayment and closing costs, especially in
heated markets. Help making the jump to homeownership is often
available but it is tricky to find if you don't know where to look.
To help potential homebuyers, HSH offers its database of Homebuyer
Assistance Programs by state, where information about these
valuable programs, vital website addresses, contact info and more
can be found.
Find the lists here for the 25 most expensive and 25 least
expensive metropolitan areas with display maps for each list.
You can also read the full article, The Salary You Must Earn
to Buy a Home in the 50 Largest Metros.
About HSH.com
HSH.com is owned and operated by
QuinStreet, Inc. (Nasdaq: QNST), a pioneer in delivering online
marketplace solutions to match searchers with brands in digital
media. QuinStreet is committed to providing consumers and
businesses with the information and tools they need to research,
find and select the products and brands that meet their needs.
HSH.com is a member of the company's expert research and publishing
division.
HSH.com empowers homebuyers and homeowners to fully understand
their home financing choices and provides opportunities for them to
engage with partners to execute their transactions. Since 1979, HSH
has guided consumers seeking independent, objective and
expert-level information, forecasts and data. HSH offers unique
analysis, calculators, tools and content to demystify first
mortgages, home equity loans and lines of credit, reverse mortgages
and more. Keith Gumbinger, mortgage
expert and vice president of HSH.com, is available for interviews
on request.
Website: https://www.hsh.com
Twitter: @HSHassociates
Facebook: https://www.facebook.com/HSHassociates/
Media Contact
Amy
Eury
aeury@quinstreet.com
412-532-9352
OR
Liberty Communications for QuinStreet
Rick Judge, 415-429-5652
QuinStreet@libertycomms.com
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SOURCE HSH.com