How Much Salary Do You *Really* Need to Buy A Starter Home

The news has not been great for first-time homebuyers lately. True, just about every type of buyer has woeful stories to tell about today’s stressed housing market, but first-timers? They have found themselves in an unfortunate league of their own.

The reason: Affordable starter homes, those essential first purchases in a typically lifelong journey of homeownership and building security and wealth, are vanishing across the U.S. like summertime cicadas. And these entry-level homes that do hit the market are now often priced out of the reach of the people who need them the most.

It’s a problem that has been gathering steam for some time. Classic starter homes began going up in earnest across the country after World War II, giving young Americans without much equity the ability to own property. Builders made these abodes smaller without as many high-end amenities to keep them more affordable for first-time buyers. But in recent years, they’ve shifted to erecting larger, more profitable homes as land, materials, and governmental costs have driven up prices. Many starters have been torn down so larger homes can go up in their stead. And investors have bid up the prices on those that remain.

So, how much do most people really need to earn each year in order to secure their own piece of the American dream in today’s market? Realtor.com® looked at the household incomes that buyers would need to have in the 100 largest metropolitan areas to afford a two-bedroom starter home.

In the short term—the next several months at the very least—it doesn’t look like mortgage rates will fall or incomes will shoot up. But there are signs that the beginning of a housing correction could put starter-home shoppers back into a better position. More homes are for sale and there are fewer buyers who can afford to compete for them.

“We have seen buyer demand pull back in a big way, because affordability has come down so much,” Hale says. “And hiked interest rates seem to be having an impact, with listing inventory climbing in the past few months.”

To find out how much a starter home costs across the nation, Realtor.com looked at the median list prices for two-bedroom homes in the 100 largest metropolitan areas for September, using a 6.25% mortgage rate. Then we calculated the median monthly mortgage payment, including estimated taxes and insurance costs, to come up with the median annual household income buyers would need to afford a starter home. This assumes buyers don’t spend more than 30% of their take-home pay on housing.

(Metros include the main city and surrounding suburbs, towns, and smaller urban areas.)

If you’re curious to find out how much a starter home costs in the 100 largest metros, you can search the interactive table below to learn the estimated monthly payments and annual income required to purchase a two-bedroom home in these areas.

Salaries needed to buy a starter home in Jasper Alabama (Walker County) and Cullman Alabama (Cullman County)

To find out how much a starter home costs in Walker County and Cullman County Alabama, we looked at the median list & sold prices for three-bedroom homes in September, using a 6.25% mortgage rate. Then we calculated the median monthly mortgage payment, including estimated taxes and insurance costs, to come up with the median annual household income buyers would need to afford a starter home. This assumes buyers don’t spend more than 30% of their take-home pay on housing.

JASPER ALABAMA (WALKER COUNTY)

Median starter home list price: $147,000
Median monthly housing payment: $1,080
Median annual household income required to purchase a starter home: $43,200

CULLMAN ALABAMA (CULLMAN COUNTY)

Median starter home list price: $185,000
Median monthly housing payment: $1,140
Median annual household income required to purchase a starter home: $45,600