Photo: Robert Clark
Experts recommend homebuyers purchase a home worth about 2.5 times their annual salary, but in NYC the average home’s value is equal to nearly 10 years of income.
The average New York City home is valued at $569,000, according to Census data, or 9.6 years of the average household salary, says a report released yesterday by the personal finance tech company SmartAsset.
This is well above the national average home price of $361,000.
“One good thing for prospective New York homeowners is that mortgage rates in the state of New York are actually below the national average,” says SmartAsset in the report.
This means that, for New Yorkers, taking out a mortgage to buy a home is cheaper than in other states.
The top 10 cities where the average home is worth at least 7 times the average household salary included: Los Angeles, CA, Honolulu, HI, San Francisco, CA, Oakland, CA, Long Beach, CA, Anaheim, CA, Irvine, CA, Miami, FL, and San Francisco, CA — in addition to NYC.
The West Coast is home to more of the least affordable cities in the country, where it takes on average 9 years of income to afford the average home. And even the most affordable California city, Bakersfield, ranked 45th on SmartAsset’s index of the 100 largest cities.
Buying a home valued at more than the recommended 2.5 times household income can make purchasing extremely difficult for first-time buyers.
“If you live in a city where the median home is valued at more than 2.5 times the median household income, it can take longer to save up money for a down payment and it can mean you are spending a larger chunk of a household’s monthly income to pay the mortgage,” AJ Smith, the VP of Financial Education at SmartAsset, tells BuzzBuzzNews.
But while big cities like NYC and Los Angeles rank among the least affordable, more affordable options are available in the Midwest. Homebuyers seeking more affordable options should investigate cities like Detroit, MI and Toledo, OH, where the average home is worth less than 2.5 years worth of the average household income.
To create its index of how much income was needed to buy the average home in the largest 100 US cities, SmartAsset examined 2016 Census housing and salary data.
Click here to read the entire report.