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Even If They Work in a High-Paying Field, Housing Is Still Unaffordable for Some Americans

Jobs in industries like computer technology, engineering, and law are among the highest paying jobs in the country. In fact, jobs in these three industries are the highest paying jobs in 49 of the nation’s 50 largest metros. It stands to reason, then, that these professionals will likely have an easier time affording a home than those who work in other professions.

But is that always the case?

To take a deeper look at what impact working in a high-paying industry can have one someone’s ability to afford a home, LendingTree, the nation’s largest online loan marketplace, has ranked the nation’s 50 largest metros by how affordable they are to someone working in a given metro’s highest paid industry.

According to our study, working in a metro’s highest paid industry can result in an affordable home payment that is hundreds of dollars higher than it is for those earning the median salary for an area. Nonetheless, our study also shows that there are a few metros where working in the highest paid industry may not be enough to comfortably afford a median priced home.

Key findings

  • On average, someone working in the highest paid industry in one of the nation’s 50 largest metros can expect to make over $900 more a month than what they would need to make to comfortably afford a median priced home in their area. In only two of the nation’s 50 largest metros does earning the median salary for the highest paid profession in the area not make a median priced home generally affordable.
  • Even with a high-earning job, you’ll still struggle to afford housing in two cities — San Jose and San Francisco. In both San Jose and San Francisco, a median-priced home would cost an average of about $269 more than what someone earning a median salary in that metro’s highest paid industry could afford.
  • Median income earners in the highest paying industries in Houston, Detroit and Washington, D.C. have the easiest time affording a median priced home in their area. In these three metros, these types of workers earn over $1,300 more than what they would need to afford a median priced home.
  • Legal occupations are the highest paying professions in the nation’s three largest metros, New York, Los Angeles and Chicago. In these three metros, those who work in a legal profession could expect to make an average of $728 more than what they would need to make in order to comfortably afford a median priced home in the area.
  • Architecture and/or engineering jobs show up as the highest paying professions in more metros than do jobs in any other field. Architects and engineers are the highest paid professionals in 19 out of the nation’s 50 largest metros. In these metros, those who are employed in these fields can expect to make an average of over $1,000 more a month than what they would need to make to pay for the monthly payment on a median priced home.

Metros where housing is the most affordable to those employed in that metro’s highest paid industry

No. 1: Houston

  • Highest paid industry: Architecture and Engineering
  • Median earnings in highest paid industry: $92,747
  • Median home value: $166,500
  • Likely monthly payment for a median priced home: $655
  • Affordable monthly payment for a median income earner: $2,164
  • Monthly payment surplus: $1,509

No. 2: Detroit

  • Highest paid industry: Architecture and Engineering
  • Median earnings in highest paid industry: $87,657
  • Median home value: $149,900
  • Likely monthly payment for a median priced home: $590
  • Affordable monthly payment for a median income earner: $2,045
  • Monthly payment surplus: $1,455

No. 3: Washington, D.C.

  • Highest paid industry: Legal
  • Median earnings in highest paid industry: $124,118
  • Median home value: $397,900
  • Likely monthly payment for a median priced home: $1,566
  • Affordable monthly payment for a median income earner: $2,896
  • Monthly payment surplus: $1,330

No. 4: Hartford, Conn.

  • Highest paid industry: Legal
  • Median earnings in highest paid industry: $95,746
  • Median home value: $244,300
  • Likely monthly payment for a median priced home: $961
  • Affordable monthly payment for a median income earner: $2,234
  • Monthly payment surplus: $1,273

No. 5: Chicago

  • Highest paid industry: Legal
  • Median earnings in highest paid industry: $91,119
  • Median home value: $222,600
  • Likely monthly payment for a median priced home: $876
  • Affordable monthly payment for a median income earner: $2,126
  • Monthly payment surplus: $1,250

Metros where housing is the least affordable to those employed in that metro’s highest paid industry

No. 1: San Jose, Calif.

  • Highest paid industry: Computer and Mathematical
  • Median earnings in highest paid industry: $123,052
  • Median home value: $815,000
  • Likely monthly payment for a median priced home: $3,207
  • Affordable monthly payment for a median income earner: $2,871
  • Monthly payment deficit: $336

No. 2: San Francisco

  • Highest paid industry: Legal
  • Median earnings in highest paid industry: $112,168
  • Median home value: $716,500
  • Likely monthly payment for a median priced home: $2,820
  • Affordable monthly payment for a median income earner: $2,617
  • Monthly payment deficit: $203

No. 3: San Diego

  • Highest paid industry: Architecture and Engineering
  • Median earnings in highest paid industry: $86,596
  • Median home value: $484,900
  • Likely monthly payment for a median priced home: $1,908
  • Affordable monthly payment for a median income earner: $2,021
  • Monthly payment surplus: $112

No. 4: Los Angeles

  • Highest paid industry: Legal
  • Median earnings in highest paid industry: $97,707
  • Median home value: $537,000
  • Likely monthly payment for a median priced home: $2,113
  • Affordable monthly payment for a median income earner: $2,280
  • Monthly payment surplus: $166

No. 5: Boston

  • Highest paid industry: Computer and Mathematical
  • Median earnings in highest paid industry: $91,015
  • Median home value: $393,500
  • Likely monthly payment for a median priced home: $1,549
  • Affordable monthly payment for a median income earner: $2,124
  • Monthly payment surplus: $575

Working in a high-paying industry can make a home more affordable, but potential homebuyers should still shop around for loan offers

As our study shows, in all but two of the nation’s largest metros, earning the median salary in that metro’s highest paid industry will make a home much more affordable than it might otherwise be. But, it is important to remember that even if you work in a high-paying field, it is still necessary to thoroughly prepare before purchasing a home. For example, all homeowners, not just those who work in high-paying industries, would benefit from shopping around for a mortgage, paying off debts and building up their credit.

This is because by taking these steps, a potential homebuyer could save thousands of dollars over the life of their loan. These savings could be the difference between whether a home is affordable or not. Furthermore, the savings that can be gained by buying a home a lower rate can be used to pay off other debts, like student loans, as well as creating an extra cushion of savings for unforeseen expenses.

Because many jobs in high-paying industries require years of work experience, some people may already own a home by the time they start work in one of these industries. As a result, those who do find themselves transitioning into a higher paying job after they have already purchased a home, might benefit from refinancing their loan. Refinancing can be beneficial for those earning more income than they did when they first purchased their home, as it can make their financial profile more appealing to lenders, and therefore help them get a better interest rate on their loan or otherwise make it easier to pay off.

Methodology

When determining whether or not a home is affordable, we assume that a potential buyer will be able to afford a 20% down payment on the median home value in their area, and that they will receive a mortgage loan with a rate of 4.25% (the average rate offered to Americans). By using that data, we calculated the likely monthly down payment for a median priced home in a given metro.

We calculate an “affordable” monthly mortgage payment based on the “28% rule,” which says that a person should not spend more than 28% of their yearly gross income on yearly costs related to housing. This rule, while not necessarily applicable to everyone, is useful for homebuyers to keep in mind, as it helps to ensure that they are not overspending on their home and leaving too little money for other expenses.

By subtracting the monthly housing payment that is affordable to a person making a median income from the highest paid industry in their area from the calculated housing payment that would be required to purchase a home valued at the median level, we are able to determine whether or not the average person working in a metro’s highest paid industry can afford to purchase a home in the metro that they live in.

 

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