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Rising home prices and interest rates have made it challenging for some people, especially young adults, to be able to purchase a home. The good news is, in Philadelphia you need a lower yearly salary to be able to afford a typical mortgage compared to other cities and states in the country. The flip side is that you’ll need to earn about 17% more than you did last year to afford a typical mortgage in Philly in 2022, according to a recent Redfin report from April 2022.
Philadelphia’s Increase In Yearly Salary to Afford a Home Was the 2nd Lowest in the Country
According to Redfin, you need to earn a minimum yearly salary of $49,068 in 2022 to afford the median monthly mortgage payment of $1,227. That is up 17.1% from 2021 when you needed to earn $41,920 per year to afford the median monthly mortgage payment of $1,048. This is the 2nd lowest increase in yearly income need to afford a home across the country. The only city with a smaller increase was Pittsburgh.
The median home price in Philly as of April 2022 was $265,000. That is up 2.3% from 2022. Across the country, home prices have increased 17.3%. So your chances of affording a home in Philly are much better than other cities.
Comparing this to other cities with similar increases, homebuyers in Pittsburgh need to earn $39,532, up 16.3% from last year. In Chicago they need to make $57,400, up 18.2% from last year. In Milwaukee, $47,355 which is up 20.4% and Detroit buyers need to earn $30,737, up 21.3% from 2021. These are the 5 smallest increases in yearly income needed to afford a home across the country.
Nationally, Homebuyers Need to Earn 34% More to Afford a Home
On average across the country, homebuyers need to earn $76,414 per year to afford a typical monthly mortgage payment of $1,910. That’s up 34% from March 2021. Of course, every city is very different and location matters a lot, so this is an overall average. But in every state, the amount of money you need to earn per year has increased by more than 15%. This is all according to Redfin’s report comparing March 2021 and March 2022 numbers. They came up with the typical mortgage payments assuming a 5% down payment.
There are a number of different things that contribute to this overall increase. The housing market has seen high demand and low inventory for quite some time. The national median home sale price hit a record high in March 2022 at $412,700. That’s up 17.3% from 2021.
However, we have also seen mortgage rates increase from 3% to more than 5%. There are pros and cons to this. It will likely slow the price growth and curb some competition for homes, according to Redfin’s Deputy Chief Economist.
Which Cities Saw the Biggest Increase in Income Needed to Afford a Home?
Although it’s alarming to see the amount of money you need to buy a home increase across the country, Philadelphia had a very small increased compared to some other major cities. The top 5 biggest increases in income needed to afford a home are the following:
Tampa, FL: $67,353 (+47.8%)
Phoenix, AZ: $87,026 (+45.7%)
Las Vegas, NV: $79,620 (+45.6%)
Orland, FL: $69,804 (+43.8%)
Jacksonville, FL: $64,806 (+43.0%)
Interested in Finding Out How Much Home You Can Afford?
If you’re thinking about buying a home in Philadelphia, the first step is talking to a trusted lender. They can help you understand how much home you can afford and get you prequalified. In a competitive housing market like today, being prequalified is absolutely essential to have your offer considered on a home.
You also want to get in touch with a real estate agent who can prove that they have your best interest in mind. They will be able to show you homes available for sale that meet your criteria and price point. At Venture Philly, we will go above and beyond to not only show you what’s available, but also generate additional opportunities that might not even be on the market yet.
We are more than happy to connect you with an experienced lender and agent. Reach out to us today to start the process of finding your dream home.