Here’s the Salary You Need to Buy a Home in Our Favorite West Coast Cities
Thinking of Purchasing a Home on the West Coast? Read This Article First!
There are many variables that go into financing a home, including your credit, the mortgage rate, and how much you’re willing to put on a down payment, among others. HSH, a mortgage resource, used national mortgage rate data, property tax rates, and homeowners insurance rates to calculate the income that a potential buyer would need to make in 50 of the US’s metropolitan areas.
The calculation includes only the base cost of owning a home, meaning that maintenance and other expenses still aren’t taken into account in these calculations. In addition, HSH doesn’t define what makes an actual home as opposed to a studio apartment— opting to use the National Association of Realtors median price for an existing family home.
Thinking about purchasing a home in a metropolitan area on the West Coast? Find out if you have what it takes before you take the plunge.
San José, California
San José ranked as the least affordable city in the US — worse even than San Francisco and New York. If you plan on purchasing a home with 20% down and an average mortgage rate of 4.53%, you would need to make around $262,115 in order to purchase a home in San José, because the average monthly payment is $6,116.
So why is San José so expensive? Situated right in the heart of Silicon Valley, the city is home to tech giants such as Google and Apple in addition to many other successful startups, where high-paying jobs make the housing market extra competitive.
San Francisco, California
While San José is first on the list of least affordable cities when it comes to purchasing a home, San Francisco follows closely behind at number two. With a population of 777,660, the median home price is $917,000. The salary needed to purchase a home with a monthly mortgage payment of $4,241 is $181,770.
San Diego has a population of 1,284,347 and a median household income of $63,400 compared to a national median household income of $57,617. With a monthly mortgage payment of $2,839.75, a resident of San Diego needs a salary of $121,703.47 in order to comfortably purchase a house in the city.
Los Angeles, California
To round out the list of California’s arsenal of expensive cities, Los Angeles is the fourth most expensive metro area when it comes to the housing market. The median household income in Los Angeles in 2016 was $57,953 according to the US Census Bureau. The median home price in LA, however, is $545,500.
According to HSH, someone looking to purchase a home in Los Angeles would need to make at least $110,052.84 a year—almost twice the median household income.
While Seattle is geographically far from the the tech mecca of Northern California, the housing prices are not that far off. Seattle rang in as the fifth most expensive west coast city to purchase a house. With a median home price of $484,400, a buyer would need a salary of at least $98,678 in order to purchase a home with 20% down. The median household income in Seattle, as of 2016, is $80,000, according to The Seattle Times.
Portland is a bit more affordable than its older sibling Seattle, with a median home price of $384,800. Portland’s housing market is a tad bit more accessible to middle income home buyers, too. Folks looking to purchase a home in Portland must make at least $79,458.35 and be able to make monthly payments of $1,854.03.
If you’re looking to purchase a home in semi-close proximity to Silicon Valley without dropping over a million dollars, Sacramento is your best bet. The median home price in Sacramento is $355,000, which means that potential home buyers need to make at least $75,050.25 per year in order to make a home purchase feasible. At this price, buyers would need to be able to afford a monthly mortgage price of $1,751.17
San Bernardino, California
Located an hour west of Los Angeles and the beaches, San Bernardino is another more affordable city on the West Coast when it comes to folks looking to purchase a home without a multi-million dollar budget.
San Bernardino landed at number 14 on HSH’s list of most expensive cities for purchasing a home. The median home price in San Bernardino is $350,000, requiring a salary of $72,251.51 to be able to purchase a home with 20% down and monthly payments of $1,685.87.
Do You Have What It Takes to Purchase a Home in One of These West Coast Cities?
You’ve probably heard stories from your parents or grandparents about how they graduated from college with no debt and proceeded to purchase a house with a $100 a month mortgage, paying off the home in as little as 15 years. While this is certainly a narrative that many potential homebuyers wish were a reality today, the housing market is just not the same as it used to be.
Housing prices are on a continual rise, with mortgage rates seemingly climbing right alongside them. The cost of living in addition to the average price of a home is much higher on the West Coast than on the East—in fact, not a single west coast city landed on HSH’s list of 25 most affordable metropolitan cities.
Depending on what west coast city you are looking to buy property in, you may or may not be pleased by the required salary to be able to purchase a home.