How much income you need to afford a home in Columbus
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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.
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.