Affordability Gap Between Income Levels and Housing Prices

If housing is defined by HUD as affordable when no more than one third of a household’s income should be allocated towards housing, then this means that the maximum sale price a household can afford is about 3.794* times a household’s annual income. And the down payment required to purchase this home would be equal to 20% of this affordable price to secure a fixed 4.0% interest rate.

Based on these parameters and with 2022 regional median single-family home prices around $900K-$1MM, only households above Upper Middle income (earning greater than 195% of Nevada and Placer County’s area median income) would be able to afford a single-family home in the region without exceeding the 30% cost burden.

*Ownership Cost Assumptions Source: 2016 BAE Housing Needs Assessment

Buying Power for Home Purchase by Income Level for Nevada County

For Family of 4

Income Level – 245% AMI

  • Annual Income – $241,080 100% 100%
  • Affordable Home Purchase Price (Buying Power 3.79 Multiplied by Annual Income) – $913,693 100% 100%
  • Tahoe Truckee Regional Median Home Price – $950,000 100% 100%
  • Gap Between Regional Home Price and Affordable Home Purchase Price – $36,307 0% 0%
  • Minimum Down Payment Required For $900K Regional Median Home Price- $190,000 20% 20%

Income Level – 170% AMI

  • Annual Income – $167,280 70% 70%
  • Affordable Home Purchase Price (Buying Power 3.79 Multiplied by Annual Income) – $633,991 70% 70%
  • Median Home Price – $950,000 100% 100%
  • Gap Between Regional Home Price and Affordable Home Purchase Price- $316,009 30% 30%
  • Minimum Down Payment Required For $900K Regional Median Home Price- $190,000 20% 20%

Income Level – 120% AMI

  • Annual Income – $118,100 49% 49%
  • Affordable Home Purchase Price (Buying Power 3.79 Multiplied by Annual Income) – $447,599 49% 49%
  • Median Home Price – $950,000 100% 100%
  • Gap Between Regional Home Price and Affordable Home Purchase Price- $502,401 50% 50%
  • Minimum Down Payment Required For $900K Regional Median Home Price- $190,000 20% 20%

Income Level – 100% AMI

  • Annual Income – $98,400 40% 40%
  • Affordable Home Purchase Price (Buying Power 3.79 Multiplied by Annual Income)- $372,936 40% 40%
  • Median Home Price – $950,000 100% 100%
  • Gap Between Regional Home Price and Affordable Home Purchase Price- $577,064 59% 59%
  • Minimum Down Payment Required For $900K Regional Median Home Price- $190,000 20% 20%

Income Level – 80% AMI

  • Annual Income – $78,700 33% 33%
  • Affordable Home Purchase Price (Buying Power 3.79 Multiplied by Annual Income)- $298,273 33% 33%
  • Median Home Price – $950,000 100% 100%
  • Gap Between Regional Home Price and Affordable Home Purchase Price- $651,727 67% 67%
  • Minimum Down Payment Required For $900K Regional Median Home Price- $190,000 20% 20%

Buying Power for Home Purchase by Income Level for Placer County

For Family of 4

Income Level – 245% AMI

  • Annual Income – $250,390 100% 100%
  • Affordable Home Purchase Price (Buying Power 3.79 Multiplied by Annual Income)- $948,978 100% 100%
  • Median Home Price – $950,000 100% 100%
  • Gap Between Regional Home Price and Affordable Home Purchase Price- $1,022 0% 0%
  • Minimum Down Payment Required For $900K Regional Median Home Price- $190,000 20% 20%

Income Level – 170% AMI

  • Annual Income – $173,740 70% 70%
  • Affordable Home Purchase Price (Buying Power 3.79 Multiplied by Annual Income)- $658,475 70% 70%
  • Median Home Price – $950,000 100% 100%
  • Gap Between Regional Home Price and Affordable Home Purchase Price- $291,525 27% 27%
  • Minimum Down Payment Required For $900K Regional Median Home Price- $190,000 20% 20%

Income Level – 120% AMI

  • Annual Income – $122,650 49% 49%
  • Affordable Home Purchase Price (Buying Power 3.79 Multiplied by Annual Income)- $464,844 49% 49%
  • Median Home Price – $950,000 100% 100%
  • Gap Between Regional Home Price and Affordable Home Purchase Price- $485,156 48% 48%
  • Minimum Down Payment Required For $900K Regional Median Home Price- $190,000 20% 20%

Income Level – 100% AMI

  • Annual Income – $102,200 41% 41%
  • Affordable Home Purchase Price (Buying Power 3.79 Multiplied by Annual Income)- $387,338 41% 41%
  • Median Home Price – $950,000 100% 100%
  • Gap Between Regional Home Price and Affordable Home Purchase Price- $562,662 57% 57%
  • Minimum Down Payment Required For $900K Regional Median Home Price- $190,000 20% 20%

Income Level – 80% AMI

  • Annual Income – $81,050 32% 32%
  • Affordable Home Purchase Price (Buying Power 3.79 Multiplied by Annual Income)- $307,180 32% 32%
  • Median Home Price – $950,000 100% 100%
  • Gap Between Regional Home Price and Affordable Home Purchase Price- $642,820 66% 66%
  • Minimum Down Payment Required For $900K Regional Median Home Price- $190,000 20% 20%
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