Buying a home? You’ll need a $17K raise, Zillow finds

(NewsNation) — Five years ago, a household earning the median income could afford a typical U.S. home, but today, they’d need a $17,670 raise to do it, according to a new Zillow analysis.

To comfortably afford the mortgage on a typical U.S. home — now worth $367,969 — a buyer needs to make nearly $100,000 a year, Zillow found. And that assumes they’ve already saved $73,594 for a 20% down payment.

That means a household making the median income of $82,168 would need more than a 20% raise, nearly $18,000, to afford the mortgage payments on a typical home.

In four California metros, typical earners would need much larger raises — over six figures — to afford a home in the area.

In San Jose, a household earning the median income would need a $250,000 raise to afford the typical mortgage, even with $330,000 set aside for a 20% down payment.

Households would also need six-figure raises in San Francisco ($165,566), Los Angeles ($149,375) and San Diego ($128,954).

“Affordability remains a steep hill to climb, especially for first-time buyers,” said Kara Ng, senior economist at Zillow, said in a statement.

Today, there are only 11 major markets where the median income is enough to afford the typical mortgage payment, down from 39 such markets five years ago, according to Zillow. Those markets are generally clustered in the Midwest and Northeast.

Cleveland buyers have the most room to spare, making $11,588 more than needed to afford the typical home, followed by Pittsburgh ($11,244), St. Louis ($4,897) and Cincinnati ($4,396).

To be considered affordable, a monthly mortgage payment can’t account for more than 30% of household income.

While the supply of affordable housing still falls well short of demand, this spring’s homebuying season offered some openings for buyers: Inventory rose, and more sellers were making concessions.

In certain markets, home prices even declined, but it will likely take more than savvy negotiating to solve the affordability crisis in the long run.

“To make homeownership more broadly accessible, though, we need lasting solutions, starting with policies that allow more homes to be built in the right places,” Ng said.

The 10 cities where you need the biggest raise to afford a typical mortgage payment in the area, according to Zillow:

The calculation assumes a 20% down payment, and the raise amount needed is based on the median income for the local area.