As the price of homes continues ever higher we as investors have 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 has 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.
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.