The average millennial worker needs to make this much more money to afford a home in Boston
The dream of homeownership in Boston remains just out of reach for many millennial workers.
The dream of homeownership in Boston remains just out of reach for many millennial workers. The typical worker between the age of 18 and 34 would have to increase their annual salary by $4,394 to afford the median Boston-area home, according to Bloomberg .
The business site looked at the “affordability gap’’ in major metropolitan U.S. cities for young workers and found that Boston is the 10th least affordable city for younger workers trying to buy a home.
By looking at data from the U.S. Census Bureau, Zillow, and Bankrate, Bloomberg determined that the median value of a single-family home in Boston is $379,975, while the median annual salary for millennial workers is $46,348.
Mortgage calculations assumed a down payment of 20 percent and the state-based monthly average of 30-year fixed rates in 2015. Minimum salary requirements assume one-third of workers’ pre-taxed income is devoted to monthly mortgage payments.
Based on these conditions, the average millennial employee faces a $4,394 wage gap if they want to own a home in the Boston area.
But Boston’s challenges for younger workers who aspire to become homeowners pale in comparison to several major cities on the West Coast. Five California-based cities were among the top five least affordable metropolitan areas in the U.S. The biggest home affordability gap of $80,162 is in San Jose, followed by San Francisco ($60,975), Los Angeles ($45,761), San Diego ($36,084), and Sacramento ($6,636).
Part of the problem is most millennials have not saved up enough for a 20 percent down payment. A Federal Reserve survey found families in which the head of the household was 35 years old or younger had a median net worth of $10,400 in 2013. This is far below the approximately $76,000 needed for a down payment on a Boston-area single-family home valued at $379,975.
Bloomberg also found 37 cities where homeownership is affordable and where workers had an income surplus instead of a wage gap. The most affordable metropolitan area was Detroit, Michigan where younger workers had an earnings surplus of $21,207.
Here are some available properties around Boston that are priced below Bloomberg’s median value:
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