DALLAS — Home buyers need to earn an income of $121,398 to comfortably afford a mortgage in North Texas, about $53,000 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.
The income needed to comfortably afford a home in the Dallas metro area was well above the national average of around $106,000, according to the data.
Dallas also ranked high among Texas metros; Houston and San Antonio buyers need an income of around $95,000, while Austin buyers need an income of around $149,000, according to Zillow.
Of the top five largest metros in the country, Dallas' income level ranked third behind Los Angeles ($279,250) and New York ($213,615). Chicago ($104,757) and Houston ($95,374) were ranked lower than Dallas among the country's largest metro areas.
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."
We've seen these type of numbers before. Earlier this year, WFAA's Jason Wheeler highlighted the drastic uptick in income needed to buy a home in his Right on the Money segment.
The American Enterprise Institute issued a report analyzing five million first-time homebuyer sales in 60 of the largest metro areas in the country. In 2013, median home prices for a first-time buyer cost between 2.49 and 2.85 times their median annual income. By 2022, those median home prices had soared to 3.55-3.81 times buyers' annual median income.