These are the only 4 cities in America where average renters can afford a starter home — and 2 places where they fall more than $100K short

These are the only 4 cities in America where average renters can afford a starter home - and 2 where they are more than $100K short

These are the only 4 cities in America where average renters can afford a starter home – and 2 where they are more than $100K short

The Hometown. The house (or condo) is what Americans aim to buy to get out of the rental market and dip their toes into home ownership before they upgrade to their forever home.

But according to a study by Point2, it appears that “the ubiquitous entry-level home is becoming the stuff of myth.”

In the study, Point2 looked at homes that are in the bottom third of all properties available in that market for 50 American cities, based on Zillow data. Then, using the personal finance rule of thumb that your mortgage payment shouldn’t exceed 30% of your gross monthly income, Point 2 rated entry-level home affordability in each of those cities.

So if you’re looking for your starter home, here are four places Pointe 2 found offer the best bang for your buck.

Don’t lose

Detroit

Detroit starter homes came in at an average price of $48,129, making them much more affordable for local residents and renters.

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Here, the average income of renters was $25,004. Meanwhile, the income needed to buy a starter home would only be $19,103.

Tulsa

Although Tulsa, Oklahoma, ranks second on the list, home values ​​here see a significant spike compared to the Motor City. Here, the median starter home came in at $95,481, which is nearly double Detroit prices.

However, renters make an average of about $10,000 more than their counterparts in Detroit, with a median income of $35,039. And that’s more than enough to get into the market – they would only need $29,524 to afford a starter home.

Memphis

Memphis, Tennessee starts to get a little more affordable, with starter homes costing less than Tulsa, but Memphians also earn less than Tulsans.

Read more: Should I wait for more of a housing crash before buying a home? 3 reasons why late 2022 could be the best time to jump in

Here, the median starter home costs $87,714, and renters make an average of $30,093. However, renters would only need to shell out $27,966 to afford a starter home.

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Oklahoma City

Finally, Oklahoma City, Oklahoma, starts to heat up the list, passing that $100,000 mark.

Here the average price of a starter home costs $126,442, and the average renter $37,211. This is just over what they would need to afford a starter home, at $37,071. That’s pushing the term “affordability” to the upper limit.

Where to avoid

While these were the most affordable places to look for a starter home, the list also identifies places where homeowners who want to be left out are likely to be left out in the cold. The top two here should come as no surprise.

And really, if the most affordable homes still come in at over $1 million, can you really afford a starter home?

So, if you’re looking to set up a house while you wait to make it big in Los Angeles, or live the glamorous life of New York City, your $40,000 salary won’t do you much.

Los Angeles is officially the most unaffordable place to live, with renters making an average of $49,568 per year, and needing $166,937 per year to afford a home.

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The situation was only slightly better in New York City, where renters made an average of $52,724 per year. However, they would have to make at least $156,343 to bring a starter home to the Big Apple.

Even including New York, California cities accounted for eight of the 15 most unaffordable places to live. So if you’re looking for a starter home, it looks like you’ve found your dream home in California.

What to read next

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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