For immediate release
- Michelle Hutchison
- Global Head of Communications & Money Expert
- +61 403 192 994
- Skype: michelle.hutchison.finder
San Francisco still most expensive city to buy a home and afford to live
- finder.com compared 78 U.S. cities on salary required to buy a home and afford living costs
- San Francisco once again tops the list of highest salary needed to be a homeowner
- Don’t fall for false sense of affordability with lower interest rates
July 18, 2016 – Personal finance website finder.com has analysed how much money Americans need to buy a home and afford living costs such as groceries and a car loan, across 78 major U.S. cities.
The finder.com study compared research conducted six months ago to now, which found that while property prices have increased in general across the cities, average home loan interest rates have fallen. This has made homeownership more affordable in most of the 78 cities.
San Francisco topped the list once again, with a required salary of $162,887 simply to buy an average home costing $1.134 million. This is despite the required salary in San Francisco dropping almost 10% since January, mostly due to a drop in the average mortgage interest rate from 3.88% in January to 2.95% in July.
San Jose also remained in second place, with $119,455 required to purchase a home and cover living expenses, falling 8% since January.
In third and fourth places were Washington DC and Los Angeles at $83,374 and $83,304 required to afford a home in those cities, respectively. These two cities also swapped rankings since January, however three of the top four cities were all within California.
New York City also jumped up a place to become the fifth most expensive city to live in and buy a home, with a required salary of $80,307.
The cheapest city analysed was Jackson, MS, where citizens can afford to live on $42,916.
Only six cities became more expensive to live in since January, with the required wage increasing in Denver, Colorado Springs, Harrisburg, Columbus, Grand Rapids and Birmingham by an average of 0.64%. Home loan interest rate increases drove this change in Denver and Colorado Springs where the average rate rose from 3.86% to 4.00%. The average interest rate in Birmingham, AL, also rose from 3.71% to 4.00%.
The average wage in the U.S. in 2014 was $53,657, which is a sufficient income to live in 46 of the 78 cities analysed, according to finder.com research, based on figures from the US Census Bureau.
Money Expert at finder.com, Michelle Hutchison, says homebuyers need to be careful not to fall for a false sense of affordability.
“Our research is based on the bare minimum money needed to afford to live in these cities with an average mortgage, based on a standard 28% of income towards mortgage repayments, after saving a 20% downpayment.
“Because living expenses and the price of homes differ across the country, it’s difficult to compare which city is most affordable for different homebuyers. However, this study can be a guide to help Americans calculate the minimum costs needed to be a homeowner.
“While the study shows living in many major cities like San Francisco have dropped in cost compared to six months ago largely due to falling interest rates, house prices were still on the rise across some areas. This lower cost can give people a false sense of affordability as interest rates could rise again.
“So before thinking about moving to a new city or buying a home within your current city it’s important to compare your options first and work out the costs involved, including a buffer in case interest rates rise, to make sure you end up with the right situation for you.
The full list of 78 cities and methodology can be found here: https://www.finder.com/income-buy-home-us-cities-july-2016
|Rank||City, State||Home value||Non-housing expenditure||Non-mortgage debt||Av. interest rate||Monthly mortgage repayments||Required salary||% change for required salary||Previous rank|
|1||San Francisco, CA||$1,134,100||$29,842||$16,230||2.95%||$3,081||$162,887||-9.81%||1|
|2||San Jose, CA||$831,700||$29,842||$15,220||2.95%||$2,787||$119,455||-8.02%||2|
|4.||Los Angeles, CA||$580,000||$29,842||$14,407||2.95%||$1,944||$83,304||-7.69%||3|
|5.||New York, NY||$592,800||$35,943||$16,255||2.50%||$1,874||$80,307||-5.29%||6|
|8.||San Diego, CA||$539,100||$29,842||$16,284||2.95%||$1,804||$77,429||-8.72%||5|
Source: finder.com, analysis of data from Zillow, the US Department of Commerce, the Urban Institute and barchart. For full list of 78 cities visit: https://www.finder.com/income-buy-home-us-cities-july-2016
For further information
The information in this release is accurate as of the date published, but rates, fees and other product features may have changed. Please see updated product information on finder.com's review pages for the current correct values.
finder.com is a personal finance website, which helps consumers compare financial products online so they can make better informed decisions. Consumers can visit finder.com to compare credit cards, mortgages, personal loans, life and travel insurance, shopping coupon codes, and so much more before choosing the option that best suits their needs.
Best of all, finder.com is completely free to use. We’re not a bank or insurer, nor are we owned by one, and we are not a product issuer or a credit provider. We’re not affiliated with any one institution or outlet, so it’s genuine advice from a team of experts who care about helping you find better.
finder.com launched in the U.S. in September 2015 and is privately owned and self-funded by two Australian entrepreneurs – Fred Schebesta and Frank Restuccia – who successfully grew finder.com.au to be Australia's most visited personal finance website (Source: Experian Hitwise).