According to data collected from the National Association of Realtors combined with the average interest rate for a 30-year fixed-rate mortgage, New York City is the fifth most expensive place to live. In addition, other studies have found that the city is lagging far behind other metro areas in terms of overall market strength and home price recovery since the Great Recession.
How Much Do You Need to Earn to Live in New York City?
By looking at the median home price of a home within 27 different metropolitan areas around the country coupled with the average interest rate for a 30-year fixed-rate mortgage, it is possible to determine how much a household needs to earn each year in order to afford a home in that metro area.
Overall, the national median sales price for a home in the United States is $240,700. As such, the average homeowner would need to earn $52,699.17 per year in order to afford a home at the median price. Since real estate is all about location, however, the income necessary to own a home within various metro areas can vary quite significant. In fact, here are the top five most expensive metro areas to purchase a home in the United States and the amount that you need to earn each year to afford a home in that area:
San Francisco: $161,947
San Diego: $109,440
Los Angeles: $92,091
Boston: $87,556
New York: $86,215
The least five expensive places to purchase a home and the amount you need to earn each year to afford a home in that metro area include:
Detroit: $38,541
St. Louis: $38,131
Cincinnati: $37,179
Cleveland: $34,433
Pittsburgh: $32,390
What is the State of the New York Real Estate Market?
According to two recent studies, the New York City real estate market is experiencing some struggles. One study found that New York ranks at number 242 of the 300 markets that were examined. This ranking was based on a number of factors, including the percentage of homes selling for gain, the average number of days a house remains unsold, the vacancy rate and the foreclosure rate. In terms of the number of days it takes to sell a house, New York was ranked 286. The city was also ranked 279 in the number of mortgage holders in delinquency and number 281 in affordability. When the cities were assessed within categories broken down by size, New York finished in the number 50 spot among large cities.
When assessing home price recovery from the Great Recession of 2008 until today, a separate study found that the New York City metro area, which also includes Jersey City and White Plains in addition to the five boroughs, is falling behind. Overall, the metro area is 9.33 percent below their highest value from pre-recession. This is significantly below other cities, such as Boston that is up 3.97 percent when compared to pre-recession prices and number one ranked Denver that is 53.6 percent above pre-recession peak values.