How much salary do you need in order to afford the principal, interest, tax and insurance payments on a median-priced home in the LA metro area? Nearly six figures. That makes Los Angeles the third priciest city in the nation for homebuyers, behind San Francisco and San Diego. According to the report, you need to rake in a salary of $98,315 just to buy to buy a "median-priced" home in LA, which also assumes you have the standard 20 percent for a down payment. If you only have 10% down available the figure goes up to $115,000 a year.
For their calculations, HSH.com uses the National Association of Realtors’ 2016 fourth-quarter data for median-home prices, national mortgage rate data derived from weekly surveys by Freddie Mac and the Mortgage Bankers Association of America for 30-year fixed rate mortgages and available property tax and homeowners insurance costs to determine the annual salary it takes to afford the base cost of owning a home (principal, interest, property tax and homeowner's insurance, or PITI) in the nation's 27 largest metropolitan areas.
NAR Chief Economist Lawrence Yun noted: "Depressed new and existing inventory conditions led to several of the largest metro areas seeing near or above double-digit appreciation, which has pushed home values to record highs in a slight majority of markets." Markets remain very competitive for potential home buyers and a lack of desirable homes to buy coupled with somewhat higher mortgage rates may put a crimp into the traditional spring home buying season.
NAR President William E. Brown, a Realtor® from Alamo, California, says prospective buyers will likely see competition in their market increase even more this spring. "The prospect of higher mortgage rates and more home shoppers in coming months should be enough of an incentive for those serious about buying to start their search now," he said.
Here’s current look at how much salary you would need to earn in order to afford the principal, interest, taxes and insurance payments on a median-priced home in your metro area.