First-Time Buyers Must Earn $120,000 to Afford the Average Home 

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The median-priced home in the U.S. now costs a staggering $332,494, meaning prospective buyers need an annual income of at least $119,769 to afford it with a 10% down payment, according to a new survey from Clever Real Estate, a St. Louis-based real estate company. 

That’s about $45,000 more than the typical household earns annually ($74,755). Even with a 20% down payment, home buyers would need to earn at least $98,202, still well above the typical salary. 

The last year that the median buyer put down 20% was 1989, according to data from the National Association of Realtors (NAR). Today, the median buyer puts down just 15% of a home’s purchase price. 

The median U.S. income earner ($74,755) with 10% down could only afford a home that costs $207,529 — 38% less than the current median-priced home. 

A median-income family aiming to afford a median-priced home would need a hefty 45% down payment, or mortgage rates would need to drop from the current rate of 7.2% to 4% to make it work. 

Even with a savings rate of $1,000 each month, it would take a household five and a half years to amass the $66,500 needed for a 20% down payment on a home priced at the median of $332,494. 

As it stands, 61% of Americans find themselves priced out of the market even with a 20% down payment. 

The median home is affordable for median earners in just four states (West Virginia, Ohio, Iowa, and Indiana) and six of the 50 largest metro areas: 

1. Pittsburgh, PA 

1. Cleveland, OH 

1. St. Louis, MO 

1. Memphis, TN 

1. Indianapolis, IN 

1. Birmingham, AL 

Unsurprisingly, Los Angeles is the least affordable city, where buyers need an income of a whopping $249,471 to comfortably afford a median-priced home — nearly three times the actual median income of $87,743.