Housing & Mortgage
10 hot housing markets and the income you need to buy there
By now we know that the Great Urban Exodus of 2020 was overstated. The pandemic didn’t push big-city dwellers out to the suburbs in droves, at least not permanently.
But it did give homebuyers the inspiration—or, minimally, the implicit permission from prospective employers, now that remote work is more acceptable—to explore real-estate markets where their dollar often goes further.
Why stay in a city where half of your income goes toward housing when you could relocate without changing jobs, knock your monthly costs down by 20% and potentially get more space?
More and more Americans seem to be asking themselves that question. The real-estate firm Redfin said in January that a near-record share of its online users—about 31%—were house hunting outside of their current metro area in Q4 2021. That’s up 5% from the same time frame in 2019.
The figures were derived from a sample of 2 million users who viewed at least 10 listings in a particular metro area, which made up at least 80% of their searches on the platform. Theoretically, these folks aren’t looky loos; they’re serious about finding a new place to call home.
Miami, Phoenix and Dallas are among the top migration destinations
Redfin didn’t ask users why they were on the move, but a quick look at the top markets by search volume offers a probable motivator: affordability.
The five most popular markets by net inflow of searches (the places where more people were looking to move into a metro than out of it) were Miami, Phoenix, Las Vegas, Sacramento and Tampa. The median home price in each of these markets is within $100,000 of the national median.
Who’s looking at these markets? For the most part, people who currently live in New York, Los Angeles and San Francisco, where the high cost of living is a constant source of discouragement.
Home prices are still on the rise nearly everywhere in the U.S., to be sure. But for homeowners in the most expensive big cities, real-estate markets across the Sun Belt remain a reprieve. With mortgage rates projected to creep back up this year, perhaps now is the time to sell and relocate.
The income needed to get a mortgage
A closer look at the income qualifications for obtaining a mortgage in Redfin’s top-searched locales shows why they’re so desirable. In almost every place, homeownership is attainable on less than a six-figure salary.
Below is the annual income you would need to get a mortgage with either a 5%, 10% or 20% down payment in the top 10 markets where homebuyers are looking to relocate. Redfin doesn’t track qualifying income data, so we sourced it from the National Association of Realtors (NAR).
NAR calculates qualifying income by assuming the total house payment will not exceed 25% of the borrower’s gross income. The figures are based on sales prices of existing single-family homes in the surrounding metropolitan statistical area.
- 5% down: $98,573 annual income
- 10% down: $93,385 annual income
- 20% down: $83,009 annual income
- 5% down: $87,887 annual income
- 10% down: $83,262 annual income
- 20% down: $74,010 annual income
3. Las Vegas
- 5% down: $84,457 annual income
- 10% down: $80,012 annual income
- 20% down: $71,112 annual income
- 5% down: $101,530 annual income
- 10% down: $96,186 annual income
- 20% down: $85,499 annual income
- 5% down: $69,987 annual income
- 10% down: $66,303 annual income
- 20% down: $58,936 annual income
- 5% down: $69,001 annual income
- 10% down: $65,369 annual income
- 20% down: $58,106 annual income
- 5% down: $74,915 annual income
- 10% down: $70,972 annual income
- 20% down: $63,086 annual income
- 5% down: $85,758 annual income
- 10% down: $81,245 annual income
- 20% down: $72,217 annual incom
9. San Antonio
- 5% down: $61,608 annual income
- 10% down: $58,365 annual income
- 20% down: $51,880 annual income
- 5% down: $66,931 annual income
- 10% down: $63,408 annual income
- 20% down: $56,363 annual income
The appeal of these markets might be even greater for renters, as first-time homeownership falls further out of reach for the typical buyer in large, expensive cities.
Take Los Angeles, for example, where the annual income needed to qualify for a mortgage is between $132,465 and $157,302. An aspiring homeowner relocating to Dallas would presumably be delighted.
*Data from the National Association of Realtors describes estimated affordability in certain regional markets and does not reflect income requirements or eligibility restrictions from Guaranteed Rate. All financing scenarios are different. Contact Guaranteed Rate for more information and up to date rates.
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