LOUISVILLE, Ky. — Home buyers need to earn an income of $77,450 to comfortably afford a mortgage in Louisville, Ky., about $31,000 more than they needed in 2020, according to new data from Zillow.
The data looked at the nationwide trend of home prices outpacing income gains over the last four years. The income projections accounted for a 10% down payment and local home prices and median income levels.
Though the income needed to comfortably afford a home in Louisville is more than in years past, it is still well below the national average of around $106,000, according to the data.
Louisville also ranked low compared to surrounding metro areas; Indianapolis and Cincinnati buyers need an income of around $85,000, while Nashville buyers need an income of around $128,535, according to Zillow.
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Pittsburgh, Memphis and Cleveland are the most affordable markets, according to Zillow. Households in California need to make the most money to afford a home.
Nationwide, the highest income level needed was in the San Jose, Calif., metro area, at $454,296.
Zillow officials pinpointed the needed income increase to higher home prices and mortgage rates - and said the solution is more inventory.
"Housing costs have soared over the past four years as drastic hikes in home prices, mortgage rates and rent growth far outpaced wage gains," Orphe Divounguy, a senior economist at Zillow, said in a press release about the data. "Buyers are getting creative to make a purchase pencil out, and long-distance movers are targeting less expensive and less competitive metros. Mortgage rates easing down has helped some, but the key to improving affordability long term is to build more homes."
In 2020, a household earning $59,000 annually could comfortably afford the monthly mortgage on a typical U.S. home, spending no more than 30% of its income with a 10% down payment. That was below the U.S. median income of about $66,000, meaning more than half of American households had the financial means to afford homeownership.
Now, the typical U.S. household earns an average of $81,000 annually. This is well under the roughly $106,500 needed to comfortably afford a home in 2024.
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