How much can a family in Greater Boston comfortably spend on a house?
At least for a certain segment of the population, local homes are not as out of reach as they may feel.
With the fall house hunt upon us, many prospective homebuyers are probably wondering what type of house their family can reasonably afford in Greater Boston.
Personal finance site NerdWallet crunched some numbers to come up with an estimate that, at least for a certain segment of the population, is not as painful as you might think.
NerdWallet calculated the median income of married couples in Boston, Cambridge, and Newton to be $114,017 and advises families near that income level to spend around $402,276 on a new home. Since this suggested home price is relatively close to Boston’s median home price of $463,000, NerdWallet data analyst Kamran Rosen said many families should be able to comfortably buy homes in the area. This finding threw him for a loop.
“Boston surprised me,’’ Rosen said. “I’m from Cambridge myself and I tend to think of housing as pretty expensive, especially in the past few years. But it’s definitely possible to buy a house in Greater Boston.’’
To come up with these figures, NerdWallet evaluated “how much house’’ a typical family in each of the nation’s top 100 metro areas could comfortably afford using data on debt, median income, housing costs, and home prices. In the Boston-Cambridge-Newton area, spending $402,276 generally gets you around 1,794 square feet of house. Out of the 100 metros studied, Greater Boston came in at the 77th most affordable.
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One not-so-surprising trend was that location played a big role in how much space the average family could afford. “For instance, while the median incomes in the Los Angeles, California, and Cleveland, Ohio, metro areas are both estimated at $85,000, residents of Cleveland are able to purchase 3,503 square feet, while in Los Angeles they can afford only 757 square feet,’’ the report states.
To generate median income for married families, NerdWallet used data from the U.S. Census Bureau, adjusting for federal income tax. Researchers also assumed a 10-year saving period for each family to buy a house.
Though Boston’s homes seemed more affordable than Rosen expected, he cautioned every renter from suddenly thinking they should purchase a home.
“Buying versus renting is a very separate question,’’ Rosen said, compared to where you should look to buy. “You should consider what you have in savings, and it’s recommended that you spend no more than 30 percent of your income on housing. So it might be more of an income question.’’
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