If you're shopping for a new home, here's what you'll need to earn to be able to afford a monthly mortgage, according to data compiled by Zillow.
HOUSTON — Affording a home in today's market is a real challenge for first-time buyers thanks to soaring prices and high interest rates.
The average annual salary that homebuyers need to comfortably afford a home -- paying no more than 30% of their income -- has shot up dramatically since 2020, according to a Zillow analysis.
In January 2020, a household earning $59,000 annually could comfortably afford the monthly mortgage on a typical U.S. home. That was below the U.S. median income of about $66,000, meaning more than half of American households could swing the monthly payment.
Home shoppers today need to make on average more than $106,000 to comfortably afford a home, according to Zillow. That's 80% more than four years ago and well above the median income of an estimated $81,000.
"Housing costs have soared over the past four years as drastic hikes in home prices, mortgage rates and rent growth far outpaced wage gains," Zillow's Orphe Divounguy said. "Mortgage rates easing down has helped some, but the key to improving affordability long term is to build more homes."
A monthly mortgage payment on a typical U.S. home is now $2,188 (assuming a 10% down payment), nearly double the average cost in January 2020.
Home values are up 42.4% over four years, with the typical U.S. home now worth about$343,000. Higher home values also mean higher property taxes and insurance rates.
How Houston compares with other Texas cities
Houstonians who dream of owning a home are in better shape than the national average but the numbers are still discouraging.
- The income needed to comfortably afford a home inHouston is now$95,374, Zillow says. That's $39,779 higher than 2020.
- H-Town is virtually tied with San Antonio where the necessary salary is $95,767, up $38,307 in four years.
- Dallas is a different story. You'd need to make $121,398 there to comfortably afford a home, up $53,679 from 2020.
- The worst large Texas city for home ownership is Austin, according to Zillow. You'll need a whopping $149,267 annual salary to comfortably afford a home there, up $65,144 from four years ago.
The least affordable cities to own a home
Zillow says homebuyers in these seven cities need an annual salary of over $200,000 or more to comfortably afford a typical home.
- San Jose, CA: $454,296
- San Francisco: $339,864
- Los Angeles: $279,250
- San Diego: $273,613
- Seattle: $213,984
- New York City: $213,615
- Boston: $205,253
The most affordable large cities to own a home
- Pittsburgh: $58,232
- Memphis: $69,976
- Cleveland: $70,810
- New Orleans: $74,048
- Birmingham: $74,338
FAQs
The income needed to comfortably afford a home in Houston is now $95,374, Zillow says. That's $39,779 higher than 2020. H-Town is virtually tied with San Antonio where the necessary salary is $95,767, up $38,307 in four years.
How much money do I need to make to live comfortably in Houston Texas? ›
Salary Needed to Live Comfortably in U.S. Cities
| Rank | City | Salary needed for a single adult |
|---|
| 1 | Houston, Texas | 75,088 |
| 2 | El Paso, Texas | 75,254 |
| 3 | Lubbock, Texas | 75,379 |
| 4 | Toledo, Ohio | 77,501 |
16 more rowsMar 19, 2024
But for a median-price home in Houston — about $336,600 at the end of 2023, according to Houston Association of Realtors — a buyer would need to make about $98,400 annually. That is about $25,000 more than Houston's median household income, which HAR pegged at about $73,522, citing data firm Claritas.
What salary do you need to live comfortably in Texas? ›
What's considered a “good” salary in Texas depends on your household size and lifestyle, but most Texans make between $45,000 and $100,000 annually. Texas cities have differing costs of living, of course — Austin is much pricier than Amarillo — so where you live in the Lone Star State also matters.
What salary do you need to live comfortably? ›
The national median for living comfortably alone is $89,461, which suggests that a 50/30/20 budget might not be practical for most single people.
What salary is considered rich in Houston Texas? ›
According to a study by GoBankingRates, the minimum income needed to be considered "rich" in Houston is $121,394.
Is $100000 a good salary in Houston? ›
A $100,000 salary does more for you in Houston, after accounting for taxes and cost of living, than it does in most major cities. After taxes, a Houstonian earning $100,000 takes home about $83,000 according to consumer finance website SmartAsset, placing the city ninth in a list of 72 cities.
How much does it cost to build a 2000 sq ft house Houston? ›
It costs about $175 per square foot to build a house in Houston. You will have to spend $350,000 to build a 2,000-square-foot home in Houston. These costs will vary depending on location, property type, labor expenses, material costs, etc.
How much house can I afford in Texas making 75k a year? ›
“Assuming an average interest rate and reasonable debt-to-income ratio, someone with a $75,000 salary could potentially afford a home in the range of $225,000 to $275,000,” he said. Considering modern lending practices, it's not an unreasonable assumption — but trust your math over a lender's offer.
Is Houston real estate overpriced? ›
Furthermore, housing costs in Houston are 84.7 percent below the average of the most populous U.S. metros. Lower housing costs are one of the reasons Houston's overall living costs are 29.2 percent below the large-metro average.
As of 2022, a single adult living in Dallas County, will need to earn $17.82 per hour to support their basic needs. A single adult with one child, will need to earn $33.62 per hour to support the basic needs of their family.
Is $25 an hour good in Texas? ›
As of Apr 25, 2024, the average hourly pay for a 25 Dollar An Hour in Texas is $17.26 an hour. While ZipRecruiter is seeing salaries as high as $36.36 and as low as $8.46, the majority of 25 Dollar An Hour salaries currently range between $12.47 (25th percentile) to $20.29 (75th percentile) in Texas.
What is a good salary in Texas per month? ›
Average Salary in Texas
| Annual Salary | Monthly Pay |
|---|
| Top Earners | $81,279 | $6,773 |
| 75th Percentile | $66,069 | $5,505 |
| Average | $52,595 | $4,382 |
| 25th Percentile | $39,121 | $3,260 |
Many have graduate degrees with educational attainment serving as the main distinguishing feature of this class. Household incomes commonly exceed $100,000, with some smaller one-income earners household having incomes in the high 5-figure range. "The upper middle class has grown...and its composition has changed.
What income is considered middle class? ›
The Pew Research Center defines the middle class as households that earn between two-thirds and double the median U.S. household income, which was $65,000 in 2021, according to the U.S. Census Bureau.
What is the living wage in Houston Texas? ›
The basic living wage in Houston is $14.33 per hour. However, it's important to understand that “living wage” is only the amount of money needed to live above the poverty threshold. It doesn't account for any “extras,” such as entertainment or dining, and it also doesn't include emergency or retirement savings.
How much do you need to make to survive in Houston? ›
The analysis found that Houston was the most affordable option for both a single person and a family of four. One adult with no children can live comfortably in the Texas city on a salary of about $75,000, SmartAsset determined. A family would need about $100,000 more.
How much does it cost to live in Houston per month? ›
According to Numbeo, the monthly average cost of living is $1,446.40 for a single person (without rent) and $5,173 for a family of four (without rent). If you're thinking about or planning a move to this world-class Texan city, it's essential that you understand living costs.
What is the cost of living in Houston Texas for a single person? ›
How Much Does it Cost to Live in Houston Per Month? For a single adult, the average cost of living in Houston is about $2,886 per month. For a family of four, Houston's cost of living is roughly $6,120 per month.
Is Houston considered high cost of living? ›
One of the biggest pros of living in Houston is that it has a relatively low cost of living, especially when you consider that it's the 4th largest city in the U.S. It has a 96.9 cost of living index score, compared to the national average of 100.
