Use the Affordability Calculator to see how much home you can afford in your town.
If you’re a teacher, police officer, firefighter, or restaurant worker in the U.S., there is a good chance you can’t afford to buy a home in the town where you work in most big U.S. housing markets. Online residential real estate site Trulia released the results of a study of nearly 100 U.S. metropolitan areas that shows home affordability by profession in those markets.
Trulia used the 2016 Bureau of Labor Statistics Occupational Employment Statistics report released at the end of March. The company defined affordability as a home that would cost nor more than 31 percent of the buyer’s monthly wages including property taxes, homeowner association fees, and insurance plus mortgage principal and interest.
To refine the calculations, Trulia also assumed a 20 percent down payment on a 30-year fixed mortgage at a 4.1 percent interest rate. The calculations took into account the respective wages and home prices in various markets. That is, for example, restaurant workers in different parts of the country vary, so the average incomes for that category in that metropolitan area were used in calculating affordability based on the prices of homes in the same area.
The results from Trulia’s study are not good news for restaurant workers or civil servants. Restaurant workers had the lowest wages of the occupations studied, averaging just over $20,000 a year. With that salary, they could afford fewer than 10 percent of the homes on the market in 56 of the 93 markets in the study.
Teachers had the worst chances of affording a home in coastal California metro areas. Seven of the 10 least affordable areas for teachers were in California — the other three were Honolulu, Denver, and Austin, Texas. Teachers would have better chances of home ownership in Akron, Dayton, and Toledo, Ohio; Detroit; El Paso, Texas, Syracuse, New York; and Little Rock, Arkansas. In those areas, teacher salaries were enough to buy at least 75 percent of the homes listed.
In California, first responders including police officers and firefighters would find it difficult to buy homes in San Francisco, San Diego, and Orange County. If their salaries stayed the same, they have better home buying chances in Raleigh, North California; Madison, Wisconsin; and Nashville, Tennessee, but unfortunately first responders in those areas are paid less, so they are still largely out the market.
Looking at median list prices, the price in the middle if you listed them from high to low, of the major metropolitan areas, Dayton, Ohio was the most affordable at $129,000 and San Francisco was the least affordable at $1,249,000.
If you’re interested in how much house you can afford, Trulia also released an affordability calculator this week. The company’s mortgage calculator that tells you the monthly payment including principal, interest, taxes, and insurance for a mortgage in a given area. The new affordability calculator, in contrast, emphasizes debt-to-income ratio and shows the maximum home selling price you can afford with different ratios.