They say everything’s bigger in Texas. Home prices are no exception (at least when it comes to Dallas). With a median home price well above $200,000, many would-be home buyers are asking themselves, “How much money do I need to earn in order to afford a home in the Dallas-Fort Worth area?”
With its robust economy, bustling nightlife, abundance of cultural attractions and top-rated restaurants, schools and more, it’s no surprise the median price for a home in “Big D” is $249,000. But how much money does a typical household need to earn in order to afford a mortgage that will cover the cost of a typical Dallas home?
The answer to this question was the subject of a recent HSH.com study, where researchers found that the typical Dallas-Fort Worth household needed to earn an annual salary of at least $59,517.58 to afford the median-priced home with a 20 percent down payment. According to their estimates, HSH.com says a monthly payment for a mid-priced DFW home with 20 percent down would be in the neighborhood of $1,388. And although area home prices have stopped rising at a double-digit pace, North Texas remains one of the fastest-appreciating housing markets in the United States.
If DFW metro area buyers put 10 percent down instead of 20 percent, the annual income needed to afford a median-priced home would be $67,507.05.
“As you likely know from your own income, overall wage gains continue to be muted, rising at about a 2.5 percent annual rate, so the ability of a potential homebuyer to keep up is increasingly difficult, if not impossible,” HSH.com analysts were quoted as saying in a Dallas Morning News article. “Just to keep pace with rising prices, year-over-year income gains needed to be in excess of 10 percent in about one-third of all metros (plus more than 9 percent in another nine).
“Somewhat lower mortgage rates during the period helped to improve affordability, but we may not be able to count on this offset much as we move into the fourth quarter of 2017 and beyond.”
Home prices in DFW are up 9 percent in 2017 compared with a year earlier. That’s the fourth-largest price increase in the country, a study from Zillow claims.
For a bit of perspective, Dallas-Fort Worth had the 18th-highest annual salary needed to afford a mid-price home in its respective metro area. The metros in the top five were San Jose, CA with $216,181.25; San Francisco, CA with $171,330.88; San Diego, CA with $116,119.96; Los Angeles, CA with $115,068.77 and New York City with $99,151.22.
Other Texas cities represented on the list of 25 metros with the highest annual salaries needed to afford a mid-price home included Austin (14th-highest) with $67,440.63 and Houston (21st-highest) with $56,600.09.
Keep in mind that not everyone purchases a home priced at the median list price. There are plenty of homes priced both above and below the median, plus many buyers are successful at negotiating lower pricing before going to the closing table. In other words, if you’re considering purchasing a home in the DFW area, but your income falls below the figures mentioned in this post, fear not. You may very well qualify for financing even if you have a lower income–you may just be qualified to borrow less.
If you’re interested in seeing how much you could qualify to borrow for the purchase of a home in Dallas or the greater Dallas area, please don’t hesitate to give us a call at (972) 591-3097 or reach out to us via the contact form on this page. Also, take a moment to explore our website to see the different types of home financing we offer, including low money down options.