So, you've heard a lot about the booming real estate markets in many American cities. However, have you ever calculated if you can afford a house in Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco and Washington, D.C. on your current income and with your current debts?
Have no fear - for the first time on the internet, I present a fun, automatically updating calculator which factors your debts, down payment, income, and mortgage rate into a yes/no answer for the median house in each of these areas! Yes - automatically updating (although I can't guarantee exactly when; you can see the date when it last updated once you play with the numbers!)
Note: Your mileage may vary on ability to qualify for the rates you guess and what back end DTI you can be approved for - not to mention we don't know how fees, PMI, and other factors will affect your affordability. This is for fun only; see an advisor if you need to discuss purchasing a home with a trusted voice - and read the note which explains that these are median prices for the metropolitan area, not just the city proper below!
Methodology for the Afford a House Calculator
First, we have to credit Anne at Unique Gifter for the idea - this was a good one.
For the execution, we're currently using a back end debt to income ratio of 43%, and mortgage rates are averages provided by Freddie Mac. Freddie Mac is also providing the home price index... but we're getting the base prices for each place from the FHFA, as described in our real estate home return calculator.
A disclaimer - real estate data is based on Metropolitan Statistical Area, and the Census Bureau sets those regions up. That means this data isn't the "city proper", but the surrounding area as well. Take it up with the Census Bureau if you don't like it (I can't change it, don't ask). Here is the specific area for all 10 cities:
- Boston-Cambridge-Newton, MA-NH
- Chicago-Naperville-Elgin, IL-IN-WI
- Denver-Aurora-Lakewood, CO
- Las Vegas-Henderson-Paradise, NV
- Los Angeles-Long Beach-Anaheim, CA
- Miami-Fort Lauderdale-West Palm Beach, FL
- New York-Newark-Jersey City, NY-NJ-PA
- San Diego-Carlsbad, CA
- San Francisco-Oakland-Hayward, CA
- Washington-Arlington-Alexandria, DC-VA-MD-WV
You can also see income by city in this calculator.
Can You Afford a House in The Above Areas?
So, how did you do? Can you afford a house in the city of your dreams?