How much do you need to make to buy a home in Pensacola? Far more than the average income
The rising cost of purchasing or even maintaining living in a home in Florida is evident to everyone. Explosive home insurance premiums, high-interest rates and post-pandemic home prices are gatekeeping homeownership for many.
Real estate company Redfin conducted a recent study showing how much prospective home buyers would need to make to afford a new home in cities throughout the U.S. It revealed that home buyers would need to make $114,627 to afford the median-priced U.S. home, which was up 15% (or $15,285) from last year and up more than 50% since the start of the pandemic.
This is the highest annual salary needed to afford a home ever recorded in the U.S.
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Redfin’s study only looked at the 100 most populous U.S. metros where data was readily available, which did not include Pensacola or any areas in Escambia or Santa Rosa County, so we used their methodology and available data to see how much Pensacolians need to make to buy a house in 2023.
How much do prospective Pensacola home buyers need to make to afford a home?
Pensacola’s available data isn’t quite as up-to-date, so we used the latest U.S. Census data. Pensacolians with a monthly mortgage spent an average of $1,447 per month between 2017 and 2021.
Using Redfin’s same 30% threshold, the average Pensacola homeowner would need to earn roughly $4,823 monthly or around $64,000 before taxes to comfortably afford a home. That’s just based on data from existing homeowners, however.
Prospective first-time home buyers in Pensacola would need to earn much more to buy a house in 2023. According to the latest data from the Pensacola Association of Realtors, the median sold price for homes in October 2023 was $307,000, which is nearly 40% higher than the median value of owner-occupied housing units the U.S. Census data is based on ($220,000).
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Using Redfin’s mortgage calculator, for consistency, the monthly cost for a $307,000 home would run about $2,045 per month. This number is based on a $307,000 home with a 20% down payment of $61,400 and a 30-year fixed mortgage at a 7.412% interest rate.
So, how much does a Pensacola resident need to make per month to afford a house in 2023? Prospective home buyers would need to make about $6,816 per month or roughly $81,792 per year.
The median household income in Pensacola was $67,722 between 2017-2022, according to the U.S. Census, putting the average Pensacolian about $14,070 under what they need to purchase a home in 2023.
Most Americans earn considerably less than what’s needed to purchase a home
Redfin found that the average American household earns about $40,000 less than the income needed to buy a median-priced home ($114,627). Last year, the median household income was around $75,000. Average U.S. hourly rates have only increased about 5% since last year.
How does Pensacola compare to the rest of Florida?
Redfin included 10 Florida cities in their study. Here is how they compare to Pensacola:
The methodology
Redfin’s analysis was based on median monthly mortgage payments in August 2023 and August 2022. Redfin set a threshold of 30% of a home buyer’s income to determine what was considered affordable.
Monthly median mortgage payments were calculated assuming that the buyer made a 20% down payment and took the August median sale price and average mortgage interest rate into account.
This article originally appeared on Pensacola News Journal: Most Pensacola residents make $14K less than needed to buy a home
