According to a study by Visual Capitalist, a salary of more than $86,300 annually is needed for Phoenix residents to buy a home. Out of the 50 U.S. Metro areas selected in this report, Phoenix ranked 17th in highest salary needed to buy a home in 2022. This statistic can be worrisome to potential home buyers looking to settle in Arizona’s capital.
Increasing home prices across the Valley
The Phoenix metro has become one of hottest real estate markets in the U.S. According to a recent study, in the last 10 years, Phoenix has seen the second fastest increase in home prices when compared to other large metro areas.
If you make less than $86.3K a year, can you still purchase a home? The answer is yes.
This salary figure is based on the median home price in Phoenix. Therefore, there are plenty of homes that fall below this figure. Another major factor is where you are purchasing in the Valley. For example, homes are going to cost more in Scottsdale than they are in Mesa.
Another variable in affordability is if you are purchasing the home with a partner. With two incomes, you increase the likelihood that you will be able to afford the monthly mortgage cost.
Finally, how much you have saved for your down payment can increase (or decrease) the likelihood that you can afford a home. The bigger the down payment, the less your monthly cost will be to pay back your loan.
When looking into purchasing a home, compare your monthly income with all the expenses you will have with home ownership.
The total cost of owning a home varies depending on where you live and can include property tax and homeowners’ association fees. Also, factor in your water and electrical bills when calculating your monthly budget limitations. Another costly part of owning a home is the upkeep. Did you purchase a home that needs renovations? Are you paying for someone to take care of your lawn or pool, or are you doing it on your own? Have you considered the cost for pest control? All these factors go into your output.
When preparing to buy a house, the earlier you can get started, the better. Before you decide to buy a new home, improve your credit score and work to pay off your debts. Your credit score determines whether you’re eligible for a lower mortgage rate and your debt-to-income ratio will determine the size of the loan you’ll qualify for. Meet with a mortgage lender and estimate how much of a house you can afford before deciding to purchase. Buying a home can be challenging, being financially prepared is the best way to stay ahead.
Author: Rich La Rue is the Designated Broker for HomeSmart Phoenix, the flagship brokerage operation in the HomeSmart system. For more information, visit www.richlarue.com.