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Hot markets that showcase a desirable way of life can see the cost of living rise to staggering heights.
Prices and mortgage rates have continued to remain elevated in the U.S., and that means that homebuyers need to earn an income of more than $150,000 to afford homes in 14 out of the 50 biggest metro areas as of April, a Realtor.com analysis shows.
“It’s desirable places to live, places that haven’t built a lot of housing, and major cities that have a lot of higher-paying jobs,” Realtor.com Chief Economist Danielle Hale said in the new report. “You’ve either got to be very high-income or come into the market with a lot of equity.”
Out of the 10 most expensive metros in the country, half of them are located in California, Realtor.com reported. San Jose, a hotbed for many companies in the U.S.’s tech world, is the most expensive of them all. Homebuyers who want to live in the city where Google and Apple are headquartered will have to earn at least $361,000, and be prepared to make quick offers, as homes aren’t staying on the market for very long.
“The San Jose metro is the hottest market in the Bay Area right now,” Patrick Carlisle, chief market analyst for the Bay Area at Compass, told Realtor.com. “There aren’t too many neighborhoods in the San Jose metro where you can buy a single-family home for $1 million anymore. It can buy you a two-bedroom condo or maybe a two- or three-bedroom townhouse in some areas.”
Realtor.com’s analysis looked at median home list prices on the portal in the 50 largest metro areas and assumed a 20 percent down payment, a mortgage rate of 6.99 percent, as well as local tax and insurance rates. The analysis also assumes buyers would not spend more than 30 percent of their income on the home purchase.
The 10 metros where homebuyers need the highest income
San Jose, California
San Jose, California | Timo Wielink / Unsplash
Median home list price: $1.467 million
Median household income needed to purchase a home: $361,000
Los Angeles, California
Los Angeles, California | VentiViews / Unsplash
Median home list price: $1.192 million
Median household income needed to purchase a home: $298,000
San Diego, California
San Diego, California | Ron and Patty Thomas / Getty Images
Median home list price: $1.05 million
Median household income needed to purchase a home: $259,000
San Francisco, California
San Francisco, California | Emily-Jo Sutcliffe / Unsplash
Median home list price: $1.027 million
Median household income needed to purchase a home: $256,000
Boston, Massachusetts
Boston, Massachusetts | Tomasz Szulczewski / Getty Images
Median home list price: $870,000
Median household income needed to purchase a home: $226,000
New York, New York
New York, New York | Alexander Spatari / Getty Images
Median home list price: $769,000
Median household income needed to purchase a home: $218,000
Seattle, Washington
Seattle, Washington | Luca Micheli / Unsplash
Median home list price: $775,000
Median household income needed to purchase a home: $193,000
Denver, Colorado
Denver, Colorado | Acton Crawford / Unsplash
Median home list price: $655,000
Median household income needed to purchase a home: $161,000
Sacramento, California
Sacramento, California | Getty Images
Median home list price: $650,000
Median household income needed to purchase a home: $162,000
Washington, D.C.
Washington, D.C. | Getty Images
Median home list price: $625,000
Median household income needed to purchase a home: $159,000
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