You now need $215K a year to afford a typical Seattle-area home
Add Axios as your preferred source to
see more of our stories on Google.
You need to earn a cool $215,000 a year to afford a typical home in the Seattle area, a new report finds. That's an increase of 18% from last year — and about $100,000 more than the U.S. average.
Why it matters: High interest rates and home prices have put homeownership out of reach for many locals.
- The median annual household income in the Seattle-Tacoma-Bellevue area was about $107,000 last year, per census data.
Details: Of 100 metro areas, Seattle requires the eighth-highest income for a person to afford a median-priced home, according to data Redfin released this week.
- San Francisco leads the pack, with homebuyers needing to make more than $404,000 to afford the median monthly mortgage payment.
- San Jose is next, requiring an annual income of about $402,000.
- Trailing Seattle are New York and Boston. There, it takes annual incomes of about $198,000 and $194,000, respectively, to afford a median-priced home.
Of note: To determine affordability, Redfin took an area's median monthly mortgage payment, then calculated how much a buyer there would need to make to spend no more than 30% of their income on housing.
- The formula assumes buyers are coming in with a 20% down payment, which can be its own barrier for many buyers in Seattle and elsewhere.
Zoom in: In the Seattle area, the median home cost $787,956 in August, Redfin found, while the median monthly mortgage payment topped $5,300.
- That's nearly $2,500 above the nationwide median payment, which Redfin said hit an all-time high of $2,866 that month.
Between the lines: Rising monthly payments have largely been driven by increases in interest rates.
- The average rate on a 30-year fixed mortgage was about 7% in August, up from roughly 5.2% a year earlier, Redfin said.
On Wednesday, rates hit 8%, the highest level since 2000, CBS reported.
What they're saying: "In a homebuyer's ideal world, rising mortgage rates would push demand and home prices down enough to make up for high interest payments. But that's not what's happening now," Redfin economics research lead Chen Zhao said in a news release.
- Inventory "is still near record lows as homeowners hang on to their low mortgage rates — and that's propping up prices," she added.
The bottom line: First-time buyers, who likely will have the most trouble getting a foothold in this market, should consider condos or townhouses, which tend to be less expensive than single-family homes, Zhao said.