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These are the only 4 cities in America where average renters can afford a starter home — and 2 places where they fall more than $100K short

Amy Legate-Wolfe
·4 min read
These are the only 4 cities in America where average renters can afford a starter home — and 2 places where they fall more than $100K short
These are the only 4 cities in America where average renters can afford a starter home — and 2 places where they fall more than $100K short

The Starter Home. It’s the house (or condo) Americans aim to buy to get out of the rental market and dip their toes into homeownership before eventually upgrading to their forever home.

Yet according to a study by Point2, it looks like the “once-ubiquitous entry-level house is becoming the stuff of myths.”

In the study, Point2 looked at homes that fall in the bottom third of all the properties available in that market for 50 American cities, based on Zillow data. Then, using the personal finance rule that your mortgage payment should never be more than 30% of your gross monthly income, Point2 rated the affordability of an entry-level home in each of those cities.

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So if you’re on the hunt for a starter home, here are four places Point2 found offer the best bang for your buck.

Don’t miss

Detroit

Starter homes in Detroit came in at a median price of $48,129, making them far more affordable to local residents and renters.

Here, the average income of renters came in at $25,004. Meanwhile, the income required to afford a starter home would be just $19,103.

Tulsa

Although Tulsa, Oklahoma, is second on the list, home values here see a significant spike compared to the Motor City. Here, the median starter home came in at $95,481, which is almost double the Detroit prices.

However, renters make on average about $10,000 more than their Detroit counterparts, with an average income at $35,039. And that’s more than enough to get into the market — they would only need $29,524 to be able to afford a starter home.

Memphis

Memphis, Tennessee starts to become a little less affordable, with starter homes costing less than Tulsa, but Memphians also get paid less than Tulsans.

Read more: Should I wait for housing to crash further before I buy a house? 3 reasons the end of 2022 could be the very best time to jump in

Here, the median starter home costs $87,714, and renters make an average of $30,093. Still, renters would only need to make $27,966 to afford a starter home.

Oklahoma City

Finally, Oklahoma City, Oklahoma, really starts to heat the list up, surging past that $100,000 mark.

Here the median price for a starter home costs $126,442, with the average renter making $37,211. This is just above what they would need to afford a starter home, at $37,071. That’s really pushing the term “affordability” to its upper limit.

Where to avoid

While these were the most affordable places to seek out a starter home, the list also identifies places where aspiring homeowners are likely to be left out in the cold. The top two here should come as no surprise.

And really, if the most affordable homes still come in at over $1 million, can you really call it a starter home?

So, if you’re looking to set up home while you wait to make it big in Los Angeles, or to live the glamorous New York City life, your $40,000 salary isn’t going to do much for you.

Los Angeles is officially the most unaffordable place to live, with renters making an average $49,568 per year, and needing $166,937 annually to afford a home.

The situation was only slightly better in New York City, where renters made an average of $52,724 per year. However, they’d need to make at least $156,343 to afford a starter home in the Big Apple.

Even with New York in there, cities in California made up eight of the top 15 most unaffordable places to live. So if you’re looking for a starter home, it looks like you may just be California dreaming.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.