ATLANTA — A look at the metro Atlanta area housing cost shows the latest income requirements to buy a house.
At three price levels analyzed by real estate company Zillow, income and mortgage rate were compared to see what you need to earn to afford a house, and how big of a down payment you may need to make.
According to the National Association of Realtors, a typical down payment for first-time home buyers in 2022 was 6%, while it was 17% for repeat buyers.
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Depending on which cost tier you choose to pursue, Zillow reported that with the current mortgage rate, a bottom tier home buyer would need to earn about $86,000 to buy a home with a 5% down payment.
At 10%, the same buyer would need to earn $82,000, and at the high percentage of a 20% down payment, a potential buyer would need to earn just $68,000 per year to purchase a bottom-tier priced home at the current mortgage rate.
As of Thursday, the most recent 30-year mortgage rate for a fixed-rate mortgage was 7.22%, down by 0.07% since last week, but up almost three-quarters of a percent since 2022, according to federally-backed mortgage company Freddie Mac.
At higher price tiers, the necessary income to snatch up a new house is also higher for Atlanta’s prospective home buyers.
Going back to the 5% down payment level, in a middle-tier price for a house, the current mortgage rate means you’ll need to earn at least $121,000 to buy a home, according to Zillow. Additional data from the real estate company showed that for a similarly priced home, putting a 10% down payment on the books would mean you’ll need to earn $116,000 for a purchase to be affordable.
For those able to put down a 20% payment when buying a house in the Atlanta area, a middle-tier priced home requires an income of $96,000.
At the final level, top-tier pricing, a 5% down payment for a home requires an income at $191,000 per year to afford the cost of the mortgage at the current rate. For a 10% down payment, potential buyers would need to earn $182,000 at minimum, while a 20% down payment means buyers must earn at least $152,000 to get keys in doors.
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Zillow said the current market is hitting both buyers and sellers due to the higher mortgage rates.
“Zillow research has shown homeowners with mortgage rates below 5% are nearly twice as likely to want to hang onto their current home. The further we get from that 5% mark, the deeper the inventory deficit may become,” the company said.
For those looking to move from renting to buying, using a 10% down payment at a median household income would require earnings of $107,000 per year for an affordable home, or one that requires up to 30% of your income to pay for, according to Zillow.
A household is considered cost-burdened if they spend more than 30% of their earnings on rent or housing payments each year. Zillow said if mortgage rates rise to 8%, it could push needed income for an Atlanta resident to as much as $162,000 per year for a top-tier priced home, if including a 20% down payment.
By comparison, a mid-tier home with an 8% mortgage rate would require earnings around $103,000, while a bottom-tier pricing would need you to earn $73,000 at that same 8% rate.
Still, the real estate company said it isn’t certain that the rates will actually rise to 8%.
“The safest bet is that rates will remain volatile, and that they will stay high for the foreseeable future. Whether that means 6%, 7% or 8% is anyone’s guess, but there’s no reason to expect a significant drop anytime soon,” Zillow said.
According to Zillow, here’s how the Atlanta area’s housing market looks:
- Home values were flat from August to September. At the same time in 2019, monthly growth was 0.1%.
- Typical home values are $376,250, up 1.5% from last year.
- The share of Zillow listings with a price cut is 26.6%, compared to 25.7% in August.
- Homes are on the market a median of 18 days before sellers accept an offer, 2 days longer than in August.
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