How Much House You Can Af­ford De­pends On Where You Live

Riverbank News - - NEIGHBORHOOD VALUES - By HOLDEN LEWIS

Your abil­ity to own a home is af­fected by where you live. Even peo­ple with mod­est in­comes can af­ford homes in De­catur, Illi­nois, the metropoli­tan area with the na­tion’s most af­ford­able houses. At the other end of the af­ford­abil­ity spec­trum is the San Jose, Cal­i­for­nia, metro area, where high in­comes are out­matched by strato­spheric home prices.

A home is most af­ford­able when it doesn’t cost much more than a year’s pay. De­catur is an af­ford­able mar­ket be­cause the me­dian house costs about one and a half times the me­dian an­nual in­come. (“Me­dian” is the mid­point, where half of the val­ues or in­comes are lower and half higher.) In com­par­i­son, there’s San Jose, where a typ­i­cal house­hold earns a six­fig­ure in­come but a me­dian sin­gle-fam­ily house costs about 12 times what a typ­i­cal house­hold earns.

Ev­ery quar­ter, NerdWal­let cal­cu­lates home af­ford­abil­ity for 172 metropoli­tan ar­eas by com­par­ing the me­dian an­nual house­hold in­come and the monthly prin­ci­pal-and-in­ter­est pay­ment for a me­dian-priced sin­gle-fam­ily home. Af­ter ac­count­ing for a 20 per­cent down pay­ment, the house pay­ments were cal­cu­lated at an in­ter­est rate of 4.45 per­cent, the av­er­age rate for a 30-year fixed-rate mort­gage in the first quar­ter; pay­ments don’t in­clude in­sur­ance, prop­erty taxes or home­owner as­so­ci­a­tion dues.

The com­par­isons re­vealed the five most- and least-af­ford­able mar­kets for buy­ing a home in Jan­uary through March, or the first quar­ter of 2018. The rank­ings were com­piled us­ing data from the Na­tional As­so­ci­a­tion of Real­tors, the Cen­sus Bu­reau and NerdWal­let sur­veys.

MOST-AF­FORD­ABLE METRO AR­EAS 1. DE­CATUR, ILLI­NOIS

Me­dian home price: $73,000

Me­dian house­hold in­come: $46,198

Prin­ci­pal and in­ter­est pay­ment: $294 (equals 7.6 per­cent of me­dian monthly in­come)

In March, sin­gle-fam­ily homes for sale in De­catur had been on the mar­ket for a me­dian of 119.5 days, ac­cord­ing to Re­al­tor.com. The na­tional me­dian for all home sales was 63 days.

2. CUM­BER­LAND, MARY­LAND-WEST VIR­GINIA

Me­dian home price: $86,200

Me­dian house­hold in­come: $45,808

Prin­ci­pal and in­ter­est pay­ment: $347 (9.1 per­cent of monthly in­come)

Listed homes in Cum­ber­land had been on the mar­ket a me­dian of 136.75 days in March.

3. ELMIRA, NEW YORK

Me­dian home price: $100,800

Me­dian house­hold in­come: $51,269

Prin­ci­pal and in­ter­est pay­ment: $406 (9.5 per­cent of monthly in­come)

Homes in Elmira had been on the mar­ket for a me­dian of 97.5 days in March, just over a month longer than the na­tional me­dian.

4. BINGHAMTON, NEW YORK

Me­dian home price: $103,000

Me­dian house­hold in­come: $51,360

Prin­ci­pal and in­ter­est pay­ment: $415 (9.7 per­cent of monthly in­come)

Homes for sale in Binghamton had been listed a me­dian of 108.5 days in March.

5. PEO­RIA, ILLI­NOIS

Me­dian home price: $114,800

Me­dian house­hold in­come: $57,090

Prin­ci­pal and in­ter­est pay- ment: $463 (9.7 per­cent of monthly in­come)

Peo­ria was the quick­est­selling mar­ket among the five most-af­ford­able, with homes listed a me­dian of 77.25 days in March. LEAST-AF­FORD­ABLE METRO AR­EAS 1. SAN JOSE-SUN­NY­VALE-SANTA CLARA, CAL­I­FOR­NIA

Me­dian home price: $1.37 mil­lion

Me­dian house­hold in­come: $110,040

Prin­ci­pal and in­ter­est pay­ment: $5,533 (60.3 per­cent of me­dian monthly in­come)

Buy­ers have to act fast in the San Jose area, the cen­ter of Sil­i­con Val­ley: For-sale homes spent a me­dian 17 days on the mar­ket in March, ac­cord­ing to Re­al­tor.com. 2. HONOLULU, HAWAII

Me­dian home price: $775,500

Me­dian house­hold in­come: $80,513

Prin­ci­pal and in­ter­est pay­ment: $3,125 (46.6 per­cent of monthly in­come)

Honolulu, a pop­u­lar mar­ket for in­ter­na­tional buy­ers, had a me­dian days-on-mar­ket of 52 days in March, ac­cord­ing to Re­al­tor.com.

3. SAN FRAN­CISCO-OAK­LAND-HAY­WARD, CAL­I­FOR­NIA

Me­dian home price: $917,000

Me­dian house­hold in­come: $96,677

Prin­ci­pal and in­ter­est pay­ment: $3,695 (45.9 per­cent of monthly in­come)

Just to the north of Sil­i­con Val­ley, homes here sell al­most as fast. In the San Fran­cisco, Oak­land and Hay­ward area, homes spent a me­dian of just 22 days on the mar­ket in March, ac­cord­ing to Re­al­tor.com.

4. SAN DIEGO-CARLSBAD, CAL­I­FOR­NIA

Me­dian home price: $610,000

Me­dian house­hold in­come: $70,824

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