Here's How Much You Need to Earn to Buy a Home in Seattle, Cleveland, and 8 Other Cities

NEWS & TRENDING - MORTGAGE & LOANS NEWS
Owning a home feels out of reach for so many people, but it’s easier in some places than others.
Updated July 11, 2024
Fact checked
for sale sign outside house

We receive compensation from the products and services mentioned in this story, but the opinions are the author's own. Compensation may impact where offers appear. We have not included all available products or offers. Learn more about how we make money and our editorial policies.

The American dream of homeownership is harder to reach now than at almost any other time in history. Housing prices have soared over the last few years while incomes have lagged, making buying a new home a pipe dream for many Americans.

The team at Zillow recently compiled data from the American Community Survey (ACS) and Moody’s Analytics through 2022 to determine how much potential homeowners would need to earn each year to comfortably afford a home in various metro areas throughout the United States, and though the numbers don’t paint a pretty picture, some areas are more affordable than others.

If you’re over 50, take advantage of massive discounts and financial resources

Over 50? Join AARP today — because if you’re not a member you could be missing out on huge perks. When you start your membership today, you can get discounts on things like travel, meal deliveries, eyeglasses, prescriptions that aren’t covered by insurance and more.

How to become a member today:

  • Go here, select your free gift, and click “Join Today”
  • Create your account (important!) by answering a few simple questions
  • Start enjoying your discounts and perks!

Important: Start your membership by creating an account here and filling in all of the information (Do not skip this step!) Doing so will allow you to take up 25% off your AARP membership, making it just $12 per year with auto-renewal.

Become an AARP member now

Why are homes so expensive in 2024?

InsideCreativeHouse/Adobe expensive charges on domestic bills

Real estate prices have skyrocketed since 2020 — Zillow determined that home prices have increased a whopping 42.4% since the first quarter of 2020, compared to a 23% increase in wages during the same period. Average mortgage payments after a 10% down payment have almost doubled, an increase of 96.4% and an average of $2,188 per month.

It’s a nuanced problem with many contributing factors, but the most blatant is simply a supply and demand issue. There aren’t enough houses for the people who want to buy them, so prices have increased — the classic seller’s market.

Higher interest rates are also to blame. The Fed raised rates multiple times in 2023 to help offset booming inflation, which means mortgages are more expensive than they’ve been in years. Higher rates mean higher mortgages, which means fewer people are willing to take the plunge and take on a new loan. Fewer people moving means fewer homes on the market.

And then there’s the wages problem. Wages have not increased to keep up with home prices and the surging cost of living. So while homes are more expensive, most people just aren’t earning enough to purchase them.

So, how much do you need to earn to buy a home in 2024? Around $106,000 per year, and that’s just the average. Some metros require considerably higher incomes to comfortably own a home, while in a few, you can get by by earning less.

5 cities where homes are most affordable

SeanPavonePhoto/Adobe pittsburgh-pennsylvania-skyline-at-night

Zillow took a look at home prices and incomes in metros throughout the U.S. and found that it’s cheaper to own a home east of the Mississippi. The five cities where the income required to comfortably own a home is lowest are:

City Income needed to afford a home
Pittsburgh $58,232
Memphis $69,976
Cleveland $70,810
New Orleans $74,048
Birmingham $74,338

The only cities in the U.S. where people who earn the national median income – $31,133 – can comfortably afford a home are Pittsburgh, St. Louis, and Detroit.

5 cities where homes are least affordable

Uladzik Kryhin/Adobe buildings and streets full of crowd in san jose at sunset time

On the other end of the spectrum and the other side of the country, potential homeowners need to earn significantly more to comfortably afford a home out west. The five cities where the income required to comfortably purchase a home are:

City Income needed to 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 and Boston also require $200,000+ earnings — coming in at $213,615 and $205,253 respectively.

Bottom line

digerati/Adobe housing market

Homeownership is more expensive now than ever before, and wages are not keeping up with real estate prices. For most households to save enough money would take 8.5 years to make a 10% down payment on a home.

Over half of first-time buyers say that a portion of their down payment came from family or friends, and many Gen Z buyers are going in on homes with friends to help pay for their mortgage.

Choice Home Warranty Benefits

  • First month free
  • Protection for unexpected expense
  • 24/7 claims hotline
  • Network of over 15,000 technicians