BOSTON — Bostonians are well aware of the pricey local housing market, but a new report is laying out an eye-opening salary requirement for aspiring homeowners.
The report, released by Harvard University’s Joint Center for Housing Studies, found that you need to make more than $181,000 to afford a median-priced home in Greater Boston.
Harvard’s estimate of $181,254 for greater Boston is nearly twice the region’s median household income of $93,537.
The report was based on a 3.5 percent down payment on 30-year fixed-rate mortgage.
It assumed that buyers spend no more than 31 percent of their income on mortgage payments on a median-priced house valued just under $660,000.
“Over the past year, housing prices have gone up by more than 20 percent, and interest rates have more than doubled since December,” said Chris Herbert, managing director of the Harvard Joint Center for Housing Studies.
Herbert expects people who benefited from low interest rates in recent years will stay put.
However, he doesn’t see the salary requirement in the Boston area going down.
“We have a lot of high-income people doing well in this economy,” said Herbert. “There’s so many people doing so well looking for a place to live, and housing supply is tight.”
Herbert said the situation is leading some to continue renting, but Boston’s rental market isn’t offering much comfort either.
“As much as people are getting locked out of buying a home, they’re also facing increasing rents in this market,” explained Herbert. “Now there’s no place to hide.”
The demand hasn’t been showing any sign of subsiding in the Boston area.
“I think prices will continue to go up with demand,” said Bradford Sprogis, with Sprogis & Neale Real Estate. “We’re seeing huge investment in biotech, and the institutions are very stable in Boston. There’s a lot of equity in this market.”
Sprogis believes that the return to many offices for in-person work is making competition even more fierce.
“With the vaccine and what we hope is the return to normal and people back in their offices, people want to live in the city again,” he added. “It’s a strong market, and it’s going to continue to be.”
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