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For millions of Americans, the dream of homeownership is becoming increasingly elusive. And in California, financial barriers are particularly high.
A new analysis of affordable homes reveals that the income required to buy a typical home has skyrocketed to around $125,000 nationwide. In California’s most expensive cities, that number is more than twice as many, and sometimes more than a quadruple layer.
According to a joint analysis by ConsumerAffairs and the Urban Institute, San Jose, home to Silicon Valley’s high-tech hub, will need to earn $547,368 a year to buy a median home.
In Los Angeles, where the median household income is $93,525, buyers need to make $318,103 to buy a home.
The top 10 US Metro Areas (ConsumerAffairs) where residents need the highest income to buy a home:
San Jose, California – San Francisco, California – Santa Cruz, California $386,359 – $377,260 Santa Maria, California – $324,300 Los Angeles, California $318,103 San Diego, California $310,119 SAN LUIS OBISPO – $293,9935 OXNARD, Salinas, California – $279,321 Honolulu, HI – $277,997
Experts say the combination of rising home prices, high interest rates and stagnant wage growth drives an affordable crisis.
From 2012 to 2024, typical monthly household payments, including mortgages, insurance, taxes and maintenance, tripled from nearly $1,091 to $2,889. This means that families now need to make $123,826 a year to stay within the recommended “28/36” budgeting rules, the study authors noted.
“One of the biggest perpetrators for rising home prices is the lack of affordable housing supply,” said Katie Visalli, research analyst at the Urban Institute. “Zoning restrictions and limited new construction have created bottlenecks that have made prices more and more expensive.”
Since 2020, the affordability gap has grown dramatically.
In just four years, the income required to buy a home has increased nearly $57,000. This is an increase of over 85%, the study found.
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Meanwhile, according to the National Association of Realtors, affordable families for families making $75,000, plummeted from 49% before the pandemic to just 21%.
For many tenants, the biggest hurdle to becoming a homeowner remains a scary down payment. Usually, it is between 3% and 20% of the selling price. Still, experts say down payments are just a starting point.
“If you’re ready to apply for a mortgage, you need to know exactly how much you can afford each month, not just the loan, but also the insurance, taxes, maintenance,” Visalli says.
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