A Typical Home in One Bronx ZIP Code Costs Over 31 Times a Local Worker’s Income
Honing in on New York City — one of the world’s most expensive cities in which to live — the most affordable ZIP codes mostly encompass areas of the Bronx, Queens, and Staten Island. But one ZIP code in particular stands out: 10017, where the median cost of a home is 5.16 times what a typical local worker earns in a year. This code covers Murray Hill, a Manhattan neighborhood just a few blocks away from the Empire State Building, considered not to be gentrifying (as of 2018) based on how the median rent has increased relative to income.
One Bell Canyon ZIP Code Ranks As the Most Affordable Place in LA for Locals To Buy a Home
It’s a city so steeped in wealth that — according to wealthy property owners protesting a local tax designed to help the homeless — even five million dollars won’t get you a mansion. But surely there are some ZIP codes in Los Angeles where it’s possible for the ordinary earner to buy a home? 91307 comes top in that respect, an area of Bell Canyon and West Hills where a typical home goes for just 7.80 times more than what a local household earns in a year (an impressive $125,343).
Among the least affordable ZIP codes in LA is 90007 (27.79), a code that encompasses the neighborhood of North University Park, one of the lowest-income neighborhoods in the country. Situated close to the University of Southern California, luxury housing developments intended solely for students have sprung up in recent years, threatening to displace existing residents. Landlords have also been evicting long-term renters to turn their properties into profit-generating student accommodation.
In Chicago, Houses in One ZIP Code Sell for 5.30 Times What Locals Earn in a Year
60661 ranks as the most affordable ZIP code in Chicago. The median price of a home in this code, which covers the community of Near West Side, is only 2.30 times the median annual income of a local earner. Here, July saw the groundbreaking of a new mixed-use development planned to offer 63 affordable residential units. 60655 (2.73) ranks among the next-most affordable ZIP codes, covering the community area of Mount Greenwood, one of the wealthier areas in the city.
Other ZIP codes in the Second City aren’t so affordable for the average local. 60647 (Logan Square) comes top in that respect, where a typical home costs 5.30 times more than the median household income. It wasn’t always this way in Logan Square; before twenty-first-century gentrification, this area’s inexpensive rent and housing attracted a population of immigrants and working-class citizens. Among the other least affordable ZIP codes are 60639 (5.28)
Amid a Lack of Affordable Housing, 19133 Ranks As Philadelphia’s Most Affordable ZIP Code
The 19133 ZIP code in Philadelphia ranks as the most affordable in which to buy a home in the city; the median price of a house here is just 2.36 times the median annual salary of a local worker. This ZIP code also ranks as the poorest in the city, with a poverty rate of five times the national average. Next is 19132 (2.51), encompassing an area to the west of Fairhill.
Philadelphia also has its share of neighborhoods where buying a home is out of reach for the average local earner. Indeed, according to Pew Charitable Trusts, “in Philadelphia, there simply isn’t enough affordable housing for the large number of residents at the low end of the income scale.” 19122 is the least affordable ZIP code of all, where a typical home costs 6.65 times what a local worker makes in a year. Incidentally, this ZIP code covers an area just south of the most affordable ZIP code in the city.
Essential Budgeting Tips for First-Time Home Buyers
In a time of soaring house prices and interest rates, it’s no wonder that the share of first-time home buyers in the U.S. dropped to a record low in 2022. But don’t despair if you’re in the market for your first property — follow our essential tips to help you budget like a pro.
1. Figure out what you can afford
Take a look at how much you earn in gross income per month. A good rule of thumb is to look for a property that won’t require you to spend more than 28% of your monthly gross income on your mortgage. Keep in mind any debt, too, like student loans.
Mortgage lenders will analyze your debt-to-income ratio when considering whether to grant you a mortgage. According to Investopedia: “Ideally, lenders prefer a debt-to-income ratio lower than 36%, with no more than 28% of that debt going towards servicing a mortgage or rent payment.”
2. Visualize your current spending
Free online budget templates are a great way of calculating how much you spend and on what each month. Not only does this help you figure out how much of your income needs to be allotted to essentials (like bills), but once you’ve visualized where your money is going, you can identify the expenses you can eliminate to maximize your savings for a deposit.
You don’t need to cut out all the things you enjoy spending your hard-earned money on, but perhaps there’s a luxury or two you could go without for the time being. Take a look at your bank statements; you could be one of the 42% of Americans still paying for a subscription they no longer need.
3. Research government-backed schemes
First-time buyers looking to make the most of a smaller budget should research whether they’d be able to get help from loan programs or incentives backed by the government. For example, one Federal Housing Administration (FHA) program allows first-time buyers to secure a house with just a 3.5% down payment. For more information, take a look at Investopedia’s breakdown of incentives for first-time buyers.
Once you’ve made the leap and got the keys for your first house (phew!), one final thing to remember is to make sure your house is properly insured and covered by a home warranty that protects all your essential systems and appliances against unexpected breakdowns.
Methodology
To determine the most affordable ZIP codes to buy property, we reviewed data on home prices from Zillow and income from the U.S. Census Bureau. ZIP codes were ranked based on the ratio of median home price to median household income. ZIP codes with the highest ratios of median home price to median household income were considered to be the least affordable, and those with the lowest ratios the most affordable. Data on median home price is from Zillow and is current as of October 2023. Data on median household income is from the U.S. Census Bureau’s 2021 American Community Survey. Only ZIP code tabulation areas with at least 10,000 residents were considered.