Nov 2, 2023 - News

You now need nearly $140,000 a year to afford a typical SLC home

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

Illustration: Sarah Grillo/Axios

You need to earn nearly $140,000 a year to comfortably afford a typical Salt Lake home, per a new report by Redfin.

Reality check: That's far more than the metro area's median household income of $92,000.

By the numbers: Redfin took an area's median monthly mortgage payment, then calculated how much income a local buyer would need to earn to spend 30% or less on housing.

  • That came to $139,096 to afford a $510,000 home — the median Salt Lake metro home price as of August, per Redfin's data.
  • That's 13% more than a year ago — and more than 50% above the median household income here.

Of note: The formula assumes a 20% down payment — a barrier for many prospective buyers.

Zoom out: Nationally, the income needed to afford a median home grew even more — 15% since last year.

  • Salt Lake and other hot pandemic markets posted some of the nation's smallest jumps in mortgages last year, after two years of sharply rising housing costs, the report states.

The big picture: The median income in the U.S. is $75,000 a year, but you need about $115,000 to afford the typical home.

Between the lines: Rising monthly payments, largely, have been driven by interest rates.

  • The average rate on a 30-year fixed mortgage was about 7% in August, up from about 5.2% a year earlier, Redfin said.
  • That was up to 8.1% as of Wednesday.

The bottom line: First-time buyers, who are likely to have the most trouble in this market, should consider condos or townhouses, which tend to be less expensive than single-family homes, researcher Chen Zhao wrote in Redfin's analysis.

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