Home affordability is particularly difficult in many of the United States’ largest cities, but relative bargains can still be had for urban homebuyers on a tighter budget.
Of the 50 largest cities, 11 are considered affordable for households with an average U.S. annual income of $74,580, according to an analysis by mortgage analysis firm HSH.
In Cleveland, the most affordable city on the list, homebuyers need to earn just $58,403 a year to afford the mortgage principal, interest, property taxes and homeowner’s insurance payments on the average home valued at $191,900.
The estimate assumes no more than 28 percent of gross income is spent on housing costs, with a 20 percent down payment and an average mortgage interest rate of 6.75 percent for borrowers with good or excellent credit.
DON’T MISS: Achieve financial well-being: Be happier, richer and more financially secure
In these 11 major cities, median home prices are all under $300,000 – well below the national median of $412,300, according to U.S. Census data.
The downside is that these places offer fewer well-paying jobs due to more modest local economies. Some, like Detroit, have long had a declining population.
Here’s a look at the 11 largest cities in the U.S. where households earning $75,000 can still afford a home, according to HSH.
1. Cleveland
- Required income: 58,403 USD
- Average home price: 191,900 USD
2. Pittsburgh
- Required income: 59,604 USD
- Average house price: 207,100 USD
3. St. Louis
- Required income: 68,240 USD
- Average house price: 241,100 USD
4. Detroit
- Required income: 68,335 USD
- Average house price: 240,000 US dollars
5. Louisville, Kentucky
- Required income: 69,170 USD
- Average house price: 262,000 US dollars
6. Oklahoma City
- Required income: 70,456 USD
- Average house price: $251,000
7. Buffalo, New York
- Required income: 71,669 USD
- Average house price: $229,700
8. Memphis, Tennessee
- Required income: 71,943 USD
- Average house price: $272,400
9. Birmingham, Alabama
- Required income: 75,194 USD
- Average house price: $295,000
10. New Orleans
- Required income: 75,218 USD
- Average house price: $277,700
11. Cincinnati
- Required income: $75,634.57
- Average house price: $280,600
Data for this study was compiled using median home prices from the National Association of Realtors and Freddie Mac’s 30-year fixed-rate mortgage rates for the first quarter of 2024.
Mortgage rates were 6.75% in all 50 cities studied, except for San Francisco and San Jose, California, where they were 7.16%, because their median home prices are considered jumbo loans. Data on jumbo loans — typically for amounts over $700,000 — comes from the Mortgage Bankers Association.
Property taxes were calculated for each city based on U.S. Census data, while insurance costs were based on average state rates from the Insurance Information Institute.
Do you want to stop worrying about money? Sign up for CNBC’s new online course Achieve financial well-being: Be happier, richer and more financially secure. We’ll teach you the psychology of money, show you how to manage your stress and develop healthy habits, and show you easy ways to increase your savings, reduce debt, and invest for the future. Get started today and use code EARLYBIRD for an introductory 30% discount through September 2, 2024.
Plus, Sign up for CNBC Make It’s newsletter to get tips and tricks for success in your career, with money and in life.
