Interest rates, housing markets, community and school ratings, and crime statistics are only a few of the factors that may weigh into a person’s decision regarding where to live. Owning a home has long been associated with success, stability, and a strong work ethic. An investment in your future, purchasing a home is one of your most significant financial decisions. It’s a decision nearly two out of every three Americans have made in recent years. Slightly over one-quarter of people choose to the obvious alternative: renting.
While finding the right home that will earn you a decent return on your investment is essential, perhaps even more critical is the need to find a home you can afford. This is something members of the middle class have had trouble with over the past several years. Zillow reports the median list price on U.S. homes at slightly over $211,000, which produces a monthly mortgage payment of $1,000 or so before property taxes, insurance, or any PMI. It costs around $1,350 a month to rent a typical home in the U.S. these days.
With the median household income currently at under $55,000, this level of mortgage payment is quasi-affordable most middle class workers, but taking on higher amounts can be a real stretch. And we all know that in many areas of the country, homes are much more expensive.
HSH recently published a report on the annual salary required to purchase a home in 27 different metropolitan areas. Based on this report and other supplemental income data from the Census Bureau and rental pricing data from Zillow, we created a list of places where a middle class worker cannot afford to live comfortably and buy or rent a home. You may be surprised to see some of the places that are out of reach.