Looking To Buy A Home In Chicago Heres The Salary Youll Need

Looking To Buy A Home In Chicago Heres The Salary Youll Need

Looking to buy a home in Chicago? Here's the salary you'll need.

Contact ReporterChicago Tribune

Counting your pennies a bit more these days to afford a house? Just exhale.

A new analysis by SmartAsset, the personal finance and technology website, shows it would take an annual salary of $48,384 to comfortably afford monthly home payments of $1,452 in Chicago — that includes mortgage payments, property taxes and homeowners insurance.

To come up with the $48,384 figure, SmartAsset plugged the median home value in Chicago — $243,900, based on data from the Census Bureau — into its mortgage calculator and assumed that buyers were debt-free, made a 20 percent down payment, took out a 30-year mortgage with a 4 percent interest rate and spent 0.5 percent on homeowners insurance.

That salary figure is lower than Chicago’s median household income of $53,006, according to the Census Bureau.

That’s a step in the right direction of the American Dream, considering Chicago rents necessitate a minimum hourly wage of $16.76 (after taxes), by some estimates, or a job that would pay at least $96,600 a year to be able to rent a two-bedroom apartment solo in the city.

“Compared to our coastal counterparts, Chicago has maintained affordability, so when buyers are looking, they’re better poised in Chicago than they would be in some of these other markets,” said Rebecca Thomson, president of the Chicago Association of Realtors.“Many prospective buyers are seeing that rent rates have continued to go up, so when they start evaluating cost savings, oftentimes buying a home is the better option.”

According to Thomson, vice president of agent development at @properties, there are homes at that median price point throughout all of the city’s 77 community areas. Per January sales figures from the Chicago Association of Realtors, about 44 percent of total listings were at or below $265,000.

“Chicago is much more in line with what people are making, which makes getting into a home much more easier in the city,” she said.

AJ Smith, vice president of financial education at SmartAsset, agrees and hopes studies like theirs inspire people to look a little deeper into their personal finances.

“I think people are more aware of required minimum income (for homeownership),” Smith said. “I feel before the recession, things were: ‘Yes, buy! You can do it!’ But people were not really given information like the ability to see what it means if you have other debt on the table, to give you a more comprehensive picture. We hope it gets people thinking about that and feeling a little better about the decision.”

She said the various calculators on the site (Rent versus buy? How much house can I afford?) provide more realistic numbers in terms of homeownership.

“Our goal is to get people talking about personal finance, in general — not always the most exciting dinner conversation, but really important ... especially when it comes to housing,” Smith said. “Running your specific numbers can really help you get a better handle on how it all impacts you.”

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