The average US house now requires a salary of $106k-a-year - $50k more than in 2020

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Prospective buyers need to make more than $106,000 to buy the average home

Hikes in house prices and mortgage rates have outpaced wage gains since 2020

Americans are using increasingly creative ways to get on the property ladder

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Prospective homebuyers need to earn $50,000 more than they did in 2020 to be able to afford the average home in the US, grim new research reveals.

Buyers must make $106,000 to be able to comfortably afford a property, according to data from Zillow - which looked at the 50 biggest metro areas across the US.

That is up more than 80 percent from the $59,000 required in January 2020 - laying bare the challenges Americans face being able to get and then pay for a mortgage.


But the amounts needed vary dramatically across the US. In three of the most expensive cities, an annual salary of more than $200,000 is needed - up by at least $78,000 since before the pandemic.

Looking at the average home across the US, the monthly mortgage payment has nearly doubled since 2020 - up a huge 96.4 percent to an average of $2,188, assuming a 10 percent down payment.

Mortgage rates ended January 2020 near 3.5 percent. While they then plummeted during the Covid-19 pandemic, successive interest rate hikes have caused them to double in recent years.

According to latest data from government-backed lender Freddie Mac, the average 30-year fixed-rate mortgage hit 6.94 percent as of February 29. This marked an increase for the fourth consecutive week.

Alongside higher mortgage payments, home values have also risen significantly since January 2020, creating a perfect storm for prospective buyers.

According to Zillow analysis, home values across the US have risen 42.4 percent in that time - to an average of around $343,000.

In 2020, a household earning $59,000 annually could comfortably afford the monthly mortgage on a typical US home, it found, spending no more than 30 percent of its income with a 10 percent down payment.

The necessary income was below the median US income of $66,000, meaning more than half of American households had the financial means to afford homeownership.

Now, the roughly $106,000 needed to comfortably afford the mortgage payment on a typical home is well above what a typical household earns each year, which is estimated at about $81,000.

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It is no wonder then that buyers are looking toward more experimental avenues to homeownership - including many younger Americans who are living with their parents in order to save up for a down payment.

While home values are largely rising across the US, there is some disparity among how much Americans would need to earn to afford a home in different major metro areas.

The metro area where a buyer could comfortably afford a typical home with the lowest income is Pittsburgh, where they would need a $58,232 salary, according to Zillow.

In Memphis they would need $69,976, in Cleveland they would need $70,810, in new Orleans they would need $74,048, and in Birmingham, Alabama, they would need $74,338.

Meanwhile there are seven markets among the major metros in the US where a household's income must be $200,000 or more to comfortably afford a typical home.

The top four are in California. In San Jose, homebuyers would need an income of $454,296, in San Francisco they would need $339,864, in Los Angeles they would need $279,250 and in San Diego they would need $273,613.

According to Zillow, prospective homeowners would need a $213,984 salary in Seattle, $213,615 in the New York City metro area and $205,253 in Boston.

But some experts predict that there will be a shift in the housing market in some parts of the US this year, driven by a surge in Baby Boomers downsizing into smaller properties.

Analyst Meredith Whitney, who is known as the 'Oracle of Wall Street' after she correctly predicted the 2008 financial crash, forecast house prices in some states will fall in 2024.

This, in turn, will free up inventory and bring costs down for first-time buyers.

Whitney said homes in New York, New Jersey and Ohio will see a fall in prices. By comparison, homes in Texas, Tennessee and Utah will remain strong, she said.

She told DailyMail.com: 'Around 90 percent of housing stock is owned by over 40s while 74 percent is by those over 50.

'It makes logical sense that lots of these owners will start to downsize in the next decade. That's almost 35 million homes - it's a huge number to go through the system.'

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