When considering buying a first home, experts typically agree that the target ratio of mortgage-to-income affordability should be 28 percent or about one-third of your annual income. There are many markets where homes can be found at this price point, but there are also those that are completely unaffordable to first-time homebuyers as well as others in the housing market.
Realtor.com published its first Mortgage Affordability Report (http://www.realtor.com/news/mortgage-affordability-news-story/) based upon the median income of a city and the mortgage-to-income ratio. It found that the San Francisco area topped the unaffordable list at 72 percent of income ratio, an increase of 7.3 percent over last year. San Diego followed at 56.9 percent and Los Angeles at 50.7 percent.
The most affordable housing can be found in Detroit at 13.2 percent of income ratio. St. Louis came in second at 18.1 percent and Cleveland at 18.8 percent.
Wherever you decide to live, remember to consider the cost of living for the area, property taxes, homeowner’s insurance, savings for retirement, etc. before making this huge financial commitment.