Oct 31, 2023 - News

How much income you need to afford a home in Columbus

Illustration of a door knocker in the shape of a dollar sign

Illustration: Sarah Grillo/Axios

The annual income needed to buy a typical Columbus-area home has surged nearly 70% in less than two years, according to Redfin.

Why it matters: With mortgage rates at 20-year highs and home prices hardly budging, the barrier to homeownership is higher than ever.

By the numbers: The annual income required to afford a median-priced local home in August was just over $90,000 (or $43.27 hourly), per the most recent data available.

  • But our area's median household income is $14,000 less than that, sitting just under $76,000 ($36.54 hourly), per census data.

Flashback: In October 2021, before mortgage interest rates started surging toward 8%, the minimum income needed was about $53,000.

Of note: The median sale price of a Columbus-area home was $331,000 in August, with a monthly mortgage payment of $2,257, per Redfin's data.

  • A monthly mortgage payment is considered affordable if homebuyers spend no more than 30% of their income on housing.
  • Redfin's formula assumes buyers are coming in with a 20% down payment, which is a challenge in itself.

The big picture: Nationally, the situation is even worse. The median U.S. household income is about $75,000 a year, but prospective buyers needed to earn $40,000 more — nearly $115,000 — to comfortably afford a typical home in August, Axios' Emily Peck writes.

What they're saying: Americans haven't felt this discouraged about home buying in decades, per a recent Gallup survey.

  • In April, 78% of respondents said it's a bad time to buy — the highest percentage since Gallup started asking the question in 1978.

The intrigue: If you do manage to buy in this hectic housing market, you better get comfy.

  • Depending on your down payment, it can take over 17 years to break even on your purchase, per Zillow data provided exclusively to Axios' Brianna Crane.
  • Our timelines are tracking about four years longer than the national average.
Data: Zillow; Note: Calculations assume typical increases in home values, 3% closing costs paid at purchase and 1% home maintenance fees, 6% closing costs, and 6% agent fees paid at sale; Chart: Erin Davis/Axios Visuals
Data: Zillow; Note: Calculations assume typical increases in home values, 3% closing costs paid at purchase and 1% home maintenance fees, 6% closing costs, and 6% agent fees paid at sale; Chart: Erin Davis/Axios Visuals

Of note: Zillow used typical price increases for each market to forecast the value of a median home and compare it to equity based on down payments of 3% to 20%.

Context: Historically, experts have said you need to stay in your home at least five years to break even. But with sky-high mortgage rates, new homeowners will need to stay put much, much longer if they want to make a profit when selling — at least for now.

Yes, but: If rates go down again someday, they may be able to refinance and adjust timelines accordingly.

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