House and ‘for sale’ sign, low angle view
Affording a comfortable mortgage in North Texas can be a feasible option if buyers do their research and plan carefully.
It's becoming increasingly difficult to achieve the dream of owning a home in Dallas, as buyers now require an annual income of at least $121,398 in order to comfortably afford a mortgage.
That's an increase of $53,000 from 2020, according to recent data from real estate website, Zillow.
The figures reveal a nationwide trend where home prices continue to outpace income gains. Zillow's projections took into account a 10% down payment, local home prices, and median income levels.
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Out of the five biggest metropolitan areas in the country, Dallas has the third highest income level. Los Angeles and New York have higher income levels of $279,250 and $213,615, respectively. Meanwhile, Chicago and Houston have lower income levels than Dallas, among the largest metro areas in the country, with $104,757 and $95,374, respectively.
According to the data, buyers in Dallas need a relatively high income, but it still ranks as one of the more affordable Texas metros. Meanwhile, buyers in Houston and San Antonio need an income of around $95,000, while those in Austin need an income of around $149,000.
The reason for the increase in required income is due to the rise in both home prices and mortgage rates, Zillow officials said. Their proposed solution is to construct more homes.
The key to improving long-term affordability is building more homes despite the short-term relief from eased mortgage rates.
"Housing costs have soared over the past four years as drastic hikes in home prices, mortgage rates, and rent growth far outpaced wage gains," said Orphe Divounguy, a senior economist at Zillow.
"Buyers are getting creative to make a purchase pencil out, and long-distance movers are targeting less expensive and less competitive metros," Divounguy added.
RealtyHop released a study earlier this year that determined that a family in Dallas would need to save for 6.33 years to afford a $81,000 down payment on a home.
Buyers can get creative, and long-distance movers can target less expensive metros.
The first step towards achieving this goal is to determine the amount of money they can afford to spend on their mortgage payments each month. Experts said this can be done by calculating their monthly income, expenses, and debt obligations.
Once buyers have a clear understanding of their financial situation, they can start looking for homes that fit their budget.
Experts believe that the cost of living and housing prices vary across different regions of Texas, so buyers may need to adjust their expectations and priorities accordingly.
However, the ultimate solution is to build more homes to make it more affordable for everyone.
