The cost of buying a home in the United States continues to rise, with the typical home now requiring a six-figure income to afford. In the West, specifically in California, the cost is even higher, with residents needing to make over $200,000 to afford a typical single detached home. In some cities, such as San Jose, the cost rises even further to $468,252, making it the most expensive market in the country. This trend is seen in other expensive markets, such as Anaheim, San Francisco, Honolulu, and others, where the qualifying incomes needed to purchase a home are significantly high.
California’s housing shortage is a major factor contributing to the high costs of homes in the state. With demand far exceeding the rate of home construction, prices have risen by 40% in the last four years. Wealthy individuals living in cities like San Jose, San Francisco, and Anaheim are further driving up prices, contributing to the exclusivity of certain areas like Atherton, which has been the most expensive ZIP code in the country for some time.
On a national level, the qualifying income needed to buy a typical home is $103,835. However, in the Midwest and the South, the costs are significantly lower at $74,967 and $95,511 respectively. The National Association of Realtors calculated these figures based on median sale prices, a 20% down payment, and a 7.37% interest rate, with monthly payments limited to 25% of a household’s income. This data shows the disparity in housing costs across different regions of the country.
For those looking to supplement their income, CNBC offers an online course on How to Earn Passive Income Online, covering common streams of income, tips for getting started, and real-life success stories. Additionally, signing up for CNBC Make It’s newsletter provides tips and tricks for success at work, with money, and in life. The rising costs of homeownership in certain areas of the country highlight the importance of financial literacy and opportunities for additional income to achieve the goal of homeownership.
