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How Much Income To Buy A Home

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gregb

Elite Member
Joined
Sep 3, 2011
Professional Status
Certified General Appraiser
State
California
Per Jonathan Miller newsletter:

How Much Salary Do You Need to Buy a Home? (Manhattan requires about $225,000.)
HSH Associates published a widely referenced study looking at the median home price of the 50 largest U.S. cities to determine what your salary would have to be to qualify.

New York City is about $100,000 but Manhattan’s median sales price was $1,170,000 in Q3-10217. This was similar to San Jose’s $1,165,000 median sales price that required a salary of $216,181.25.

hshsalarytabletop50-620x1200.png

[HSH.com]
 

Gobears81

Senior Member
Joined
Nov 7, 2013
Professional Status
Certified General Appraiser
State
Illinois
I simply don't understand how one can buy a $200,000 home making only $45,000/year.
Looks like it is based on PITI @ 28% of annual income. I agree with you though.

I've always wondered if the higher priced locales have maximum PITI levels that are different than the lower priced markets since the household income is not always 100% correlated with housing prices in these markets. I started appraising in 2006 and in one of my QE classes, someone that worked in banking said maximum PITI based on 33% of annual income, if I recall correctly. If so, that has come down since the housing crash, and rightfully so, but I'd be curious of what someone that works more closely with the mortgage underwriting side thinks on this
 

BRCJR

Elite Member
Gold Supporting Member
Joined
Sep 20, 2005
Professional Status
Licensed Appraiser
State
Virginia
With EXCELLENT credit and LTV at 80% or under I have seen them go to 49% (Freddie Mac)
 

fractal7221

Member
Joined
May 26, 2011
Professional Status
Banking/Mortgage Industry
State
Pennsylvania
With EXCELLENT credit and LTV at 80% or under I have seen them go to 49% (Freddie Mac)

A lender might go that high on the DTI ratio, but seems unlikely they would go that high on the Housing Expense Ratio.
 

jay trotta

Elite Member
Joined
Feb 8, 2004
Professional Status
Certified Residential Appraiser
State
Connecticut
The answer is absurdly low interest rates of 3.5 - 4%. Things will change a lot if interest rates go back into the 6, 7 or 8% range

If rates go back up, the RE Market will stand still and Lenders will take the rest of appraisers fee's to compensate their loss
 

Riick

Elite Member
Joined
Aug 14, 2007
Professional Status
Certified Residential Appraiser
State
Delaware
Yikes!!
People are waking up at last?
 
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