It’s not just the price of a home and it’s not how much you make: it’s mostly how those two things compare.
And when those two factors are linked, Atlanta has the second-most affordable set of homes among the nation’s 25 largest metro areas, according to a report out Friday from Interest.com.
The company looked at the median income in each city, then the median home price and tossed in a third factor that is fairly consistent nationally: mortgage rates.
Last year, Atlanta was number one. This year, it’s Minneapolis.
Of course, the balance of income and home price can shift either way. Nationally, the median home price used in the report was up six percent over the past year in the 25 metro areas. But median incomes rose by only two percent.
That tilts the balance away from affordability.
A modest decrease in interest rates meant that mortgage costs were lower, which helped a little. But a median-income household now can only afford a median-priced home in just 10 of the 25 metros, according to Interest.com.
“Low mortgage rates are helping home affordability to some extent, but the key ingredient – which has been missing to this point – is substantial income growth,” said Mike Sante, managing editor of Interest.com.
The result is that the demographic group that ought to be gearing up to buy its first homes is simply not matching the purchase rates of previous generations.
“Millennials, in particular, are struggling to overcome their student loans and save enough money for a down payment,” Sante said.
Median should not be confused with average. Median means that half the homes are more expensive and half are cheaper.
Atlanta’s median home price is $166,000, according to Interest.com. The company did not release the income data used, but the most recent Census Bureau figures put metro Atlanta’s median income at about $56,000.
In contrast, the nation’s top median home price is in San Francisco: $769,600. The lowest median price was Pittsburgh’s: $143,690.
Tampa has the lowest median household income: $45,880. The highest median income was that of Washington, D.C.: $90,149.
Interest.com is owned by Bankrate, which provides personal financial advice and information.
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