The median home price in the U.S. is $413,500. Assuming a 30-year fixed mortgage with an interest rate of 5.48%, the salary you would need to afford this home comes out to $95,694.82. This is almost double the annual average salary in the U. S. of $58,260. With both real estate prices and inflation surging, the cost of owning a home has become more unaffordable. Many people are moving to cities with lower costs of living, hoping to achieve their dream of owning a home.
The salary you need to purchase a home varies widely depending on where you live. Here is what you need to afford to afford the principal, interest, tax, and insurance payments on a median-priced home in these cities.
Top 5 cities
The top five metro areas are all located on the West Coast, with the top four landing in California and one in Washington state. San Jose, which is number one, is Silicon Valley’s largest city. To afford a house in the most popular destination for tech workers and entrepreneurs, you need a salary of close to $385,000, which is 6.6 times the national average.
| RANK | CITIES / METRO AREA | MEDIAN HOME PRICE | MONTHLY PAYMENT (PITI) | SALARY NEEDED |
|---|---|---|---|---|
| 1 | San Jose | $1,900,000 | $8,982.85 | $384,979.14 |
| 2 | San Francisco | $1,550,000 | $7,424.45 | $318,190.69 |
| 3 | San Diego | $965,900 | $4,839.14 | $207,391.93 |
| 4 | Los Angeles | $825,700 | $4,217.47 | $180,748.69 |
| 5 | Seattle | $818,900 | $4,168.82 | $178,663.57 |
Bottom 5 cities
The most affordable metro areas tend to be in the Midwest, South, and Mid Atlantic regions. Pittsburgh is the most affordable metro area. To afford a house in the Steel City, you need a salary of close to $55,000, just under the annual average salary.
| RANK | CITIES / METRO AREA | MEDIAN HOME PRICE | MONTHLY PAYMENT (PITI) | SALARY NEEDED |
|---|---|---|---|---|
| 1 | Pittsburgh | $215,000 | $1,268.86 | $54,379.57 |
| 2 | Cleveland | $225,600 | $1,348.23 | $57,781.38 |
| 3 | Oklahoma City | $231,900 | $1,359.79 | $58,276.52 |
| 4 | Louisville | $263,500 | $1,422.17 | $60,950.24 |
| 5 | St. Louis | $258,000 | $1,482.66 | $63,542.63 |
Only two metro areas in the U.S. are below the annual average U.S. salary of $58,260 — Pittsburgh and Cleveland. It’s not cheap to live in a large city, and the rise of remote work has allowed many white-collar workers to move out of high-cost cities. As a result, the 20 largest metropolitan areas in the country shrank by a combined 900,000 people in 2021.
Before purchasing a home, you should consider the other expenses of homeownership. The monthly payment consists of the principal, interest, property taxes, and homeowners insurance (PITI). Buying a home should be based on your personal financial situation. With many employers allowing employees to work from home, there are many desirable opportunities for first-time home buyers to buy an affordable home, particularly in the South and Midwest.