How much do you need to make to afford a house in Georgia this year?

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You could save hundreds of dollars each month by refinancing your mortgage right now

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It’s an expensive time to be house shopping

Home prices are on the rise nationwide. According to realtor.com, the U.S. saw record breaking price hikes in May — making homes increasingly more difficult to afford. The Social Security cost-of-living adjustment (COLA) for 2022 in January was 5.9%, the highest increase in 40 years — a portent of the rising cost of living in America. For potential home owners in the Peach State, it all begs the question: how much do you need to make to afford a house in Georgia in 2022?

The short answer: it’s an expensive time to be a Georgia home buyer. The long answer takes a little digging.

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The Georgia Association of Realtors reported in January that the average sales price for houses in Georgia rose 17% year-over-year and that homes spent 21% fewer days on the market.

“Declining affordability and low inventory have made it difficult for many buyers to compete in the current market, as rising inflation, surging interest rates, and record high sales prices have priced an increasing number of prospective buyers out of the market,” the association said in its housing supply overview for April 2022.

As of April 2022, the association recorded that the median sales price of Georgia homes had risen 21% year-over-year. The price now stands at a whopping $345,000 for the typical Georgia home. This number is still 19.52% below the national median home price, which has reached $428,700 — according to Federal Reserve Economic Data.

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According to Nerd Wallet, the average Georgia resident spends 19% of their income on their home. Meanwhile, the mean down payment for a Georgia home in March 2022 was $21,880, a mere 6% of the median house price, according to Bank Rate. The company also said the rate for a 30-year fixed mortgage in Georgia is 5.38% as of Friday, and the average cost of homeowners insurance in the state is $1,445 per year for 2022.

The median real estate tax payment in Georgia is $1,771 per year, roughly $800 less than the national average, according to Smart Asset. Assuming you have good credit and not too much debt, your average monthly housing costs for the typical Georgia home would be $2,214 in 2022.

If you are spending the average 19% of your annual income on your home, then your annual household income would need to be around $139,831. According to a common financial adage, you can spend up to 30% of your income on housing. At that rate, you’d need an annual household income of about $90,000 to afford that same home.

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If you can afford to put more than 6% of your home’s value down as a down payment, it will help decrease your monthly costs considerably. Many home buyers try to put down 20% of their home’s value. Speak with a trusted financial advisor before making any major moves in the modern housing market.

While Georgia remains well under the national average in many different areas of housing costs, housing prices are still on the rise. So if you are considering buying a home in Georgia, the silver lining is that it could be much worse.