ScaredyCatGuide to Real Estate: The Salary Needed to Buy a Home in Each State

in LeoFinance3 years ago

As the price of homes continues ever higher we as investors how to pay mind to what buyers can afford, especially if you are in the fix and flip business.

The spread of home prices to median income had continued to widen year after year and the chart below will show us how much income is needed to buy the average home in each state.

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Salary Needed to Buy the Average Home

What is the median income in your state?

I ask this question because than you can determine how affordable, or unaffordable for that matter, homes are in your state.

Looking at this point we see the usual suspects with California and New York demanding high salaries just to buy your average home.

However, take a look at Colorado. $100,200 to buy the average home. Any investor knows Colorado, especially Denver has been a red hot real estate market, but would you of thought it would have the 3rd highest salary demand to purchase a home?

Looking at the map graphic you will notice this information is based of acquiring a 30 year mortgage with 10% down. I'm not sure why it used 10% as most often people are either putting 20% down or using FHA with 3.5% (likely most common of all). In the latter case the salary would need to be even higher as the monthly mortgage payment will be greater due to the lower down payment.

It is data I found interesting and thought to share.

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We're pretty much screwed in every direction... we live in a county in Washington state where the median income is a good 30% below the state median household income of $73,500... while the median property value is about 7% above the state median.

I'm grateful we bought our house outright with cash 12 years ago, or we'd be renting a single wide somewhere by now. Mind you, our property taxes by now amount to more than many people pay in monthly rent.

=^..^=

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Yeah, that is crazy. Pacific northeast prices and taxes have exploded, mind as well be NY taxes.

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It's tough to know what to do. Live in a low cost state and fly other places every other weekend or live in Paradise and take a beating. There is so much seemingly quality land in Michigan in my opinion. California was a cool place but it is now overran by street tweakers.

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I have many friends that live and invest in Michigan. Seems like a solid spot (less the winter). I do the opposite, live in FL. Invest everywhere else. Luckily I bought my townhome back in 2015.

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I feel like the Florida panhandle is a good place to buy farm land.

I think most of the northern half of FL is. I did a driving tour up toward St. Augustine over to Gainesville/Ocala down to Tampa. I really like Ocala for growth, panhandle fits the mold too.

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It is nice that I can have this notion of values ​​in your country. I'm from Brazil and when we look at other places that we think would be "better", we see that the reality is not quite like that.

Thanks for sharing.

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Yeah, the U.S. as a "better option" seems to be becoming less and less than what it once was.

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That's surely some interesting data. I think work at home and freelance will really give the folks in low cost of living states here.

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Yeah, I have worked from home for 8 years and wonder why I don't move to a low cost area lol.

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Considering the little intention of the Biden administration to generate jobs by relying on free money (the so called "incentives" which is nothing more than a universal basic income), these data you present show a dramatic panorama if we consider that the value of the salary is falling as the dollar does nothing but multiply itself to infinity.

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Pretty much. 50% of the reason home prices are up is from "free" FED money. It's crazy, they can't stop printing or handing it out otherwise the whole economy will tank.

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I think this is going to become even more important as workers transition to full time remote. If entire households become remote, than not just the state, but also the area you chose becomes a lot more open and the lower cost of living areas will be targeted.

I think will take a look and see if anyone broke it down within states as well - would be a really interesting way to look for housing

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This map is a little... off to me.

I went ahead to their source to see what kind of numbers they were using, and I'll chime in on New Jersey.

They used $285,000 as the median sales price for NJ, and I don't think I've ever seen a house go for that cheap.

Paramus, NJ ($399K is an empty lot)
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East Hanover, NJ ($299K is an empty lot)
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NJ also has really high property taxes, and a $300,000 home would probably include a property tax bill of $500+ a month.

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Yeah property taxes in NJ and NY are ridiculous! Maybe areas like Camden bring down that avg price.

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That is true. Lots of property in Southern NJ can also be fairly inexpensive, since it's a lot of farmland.

I love this state but it sure is painful to live here, lol.

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