Want to buy a home in California? Here’s how much you need to earn per year, Zillow says
Looking to enter the homeowners’ club in California?
If you want to comfortably afford a home in the United States, you’ll need to earn an annual income of over $106,000, according to a new report from Zillow.
That’s 80% more than the income buyers needed to purchase a home in January 2020, the real estate marketplace company said in the Feb. 29 report.
As a result, hopeful homebuyers are “more often partnering with friends and family or “house hacking” their way to homeownership,” Zillow said.
Here’s how housing costs have soared in the past four years:
How much does it cost to buy a home in the U.S.?
The average monthly mortgage payment for a single-family home in the U.S. has almost doubled since January 2020, Zillow says.
With a 10% downpayment, a typical monthly payment is around $2,188. That’s 96.4% more than what homebuyers would have paid four years ago.
According to data collected by Zillow, U.S. home prices have increased about 42% since 2020, with the typical home averaging $343,000.
While mortgage rates averaged 3.5% early 2020, recent mortgage rates stand at around 6.6%, according to Zillow’s Feb. 29 report.
How much does it cost to buy a house in California?
According to the California Association of Realtors’ most recent home sales and price report, the median sold price of an existing single-family home in California was $788,940.
A 10% down payment on a $788,940 home would average $78,894.
Monthly payments on a 30-year fixed loan for this price with about a 7% interest rate would be around $6,200, including insurance and taxes, according to Zillow’s mortgage calculator.
Why is it so much harder to own a home now?
In 2020, a household with an annual income of $59,000 could comfortably afford the monthly mortgage on an average U.S. home by spending no more than 30% of its income with a 10% down payment, Zillow says.
At the time, that figure was below the U.S. median income of around $66,000 — which means more than half of American households could afford to own a home then.
New homebuyers now need to make at least more than $106,000 now to comfortably afford a 30-year home mortgage with a 10% down payment, Zillow said.
However, a typical U.S. household earns about $81,000 per year, making homeownership a distant dream for many, according to Zillow.
Where are the most affordable places to own a home in the U.S.?
Here’s where Zillow says buyers can comfortably afford a home in the U.S. and how much income they need to earn each year:
Birmingham - $74,338
New Orleans - $74,048
Cleveland - $70,810
Memphis - $69,976
Pittsburgh - $58,232
Where are the least affordable areas for U.S. homebuyers?
Zillow says seven metropolitan areas in the U.S., including four in California, require homebuyers to have an annual income of $200,000 or more to comfortably afford a home.
Here’s where and the annual income needed to comfortably afford a home:
San Jose - $454,296
San Francisco - $339,864
Los Angeles - $279,250
San Diego - $273,613
Seattle - $213,984
New York City - $213,615
Boston - $205,253
Which California counties have the cheapest home prices?
The California Association of Realtors’ most recent home sales and price report said these 11 counties had cheaper prices for a single-family home than the state median of $788,940:
Lassen County - $229,000
Del Norte County - $295,000
Lake County - $325,000
Siskiyou County - $329,000
Tehama County - $340,000
Tulare County and Glenn County - $349,000
Tuolumne County - $360,750
Plumas County - $363,620
Kings County - $365,000
Kern County - $375,000
Which California spots have the most expensive housing costs?
These five California counties had the most expensive prices for single-family homes, according to the industry group:
San Mateo County - $1,975,000
Santa Clara County - $1,710,440
San Francisco County - $1,530,000
Marin County - $1,524,500
Orange County - $1,320,000
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