8 Affordable U.S. Cities for Homeowners Based on Paycheck Power
Owning your own home has long been part of the American Dream. However, that part of the dream has been fading over the past few years, as the affordability of homes for the average American has become a dimmer and dimmer fantasy. Not only have incomes been dropping, but house prices in some areas have risen; even in places where prices have not climbed, incomes have not been able to keep up with the pace.
Putting numbers to the story, house prices in 25 of the largest metropolitan areas in the United States have gone up 16 percent in the last year, according to Interest.com. Compare that with a rise in incomes of 3 percent on average in those same areas, and it isn’t hard to understand why homes have become less and less affordable across the country.
Another factor that plays into home affordability is the rate at which prospective home buyers can borrow money to purchase a house. Mortgage rates, on average, rose above the 4 percent threshold for a 30-year fixed rate plan in 2013, nearly reaching 4.5 percent. That means that in many areas and to many lenders who may not have perfect credit scores, the rates will be higher than that value.
Regional variance in terms of home affordability also fluctuates. Some cities have higher median incomes than others, and the price of homes also differs. Of the 25 cities included in the Interest.com study, 17 had a negative rating for “paycheck power,” meaning that the median house is not affordable on a median income. With that said, let’s take a closer look at the other cities included in the study: the eight cities in the United States that are the most affordable to live in based on paycheck power.