Here's how much you need to earn to afford a home in 97 U.S. cities

You don't have to be a millionaire to buy a home, but earning six figures would help.

The typical American household needs an annual income of $115,000 to afford the median priced home, which is $40,000 more than what the average household makes, according to Redfin chief economist Daryl Fairweather.

"Even places that historically have been affordable now need six figures," she told CBS MoneyWatch. 

In pricey San Francisco, it may not be surprising to learn a household income of in excess of $400,000 is needed to afford the median home. But what about Boise City, Idaho, where the figure $127,000. In fact, a six-figure income is required to buy a median priced home in at least 50 U.S. cities, according to data from Redfin.

Unless you're a white-collar worker employed remotely who can move to the middle of the country, now may not be the best of time to buy a home. As Greg McBride, chief financial analyst at Bankrate.com, says to those looking to buy a home: "You're not getting a bargain. In most major markets, particularly east of the continental divide, home prices are at record highs, and the cost of financing the purchase is the highest in more than 20 years."

Escalating home prices are largely due mortgage rates now at 7.5%, making rent a more affordable option than buying a home in all but four U.S. cities: Detroit, Cleveland Philadelphia and Houston, Fairweather noted.

Also underlying rising home values is the limited supply of existing homes, with owners unwilling or reluctant to sell in an environment where they are carrying a low mortgage rate. 

"Mortgage rates may move lower at some point, but we're not going back to 3% — the 2020 levels are not going to go back," McBride said.

"It would take a recession, and we don't want that," said Fairweather.

Would-be home buyers are getting at least a sliver of relief in the form of the second consecutive weekly drop in the average rate on a typical 30-year mortgage, which last week fell 25 basis points to 7.61%, the Mortgage Bankers Association said Wednesday. The biggest weekly rate drop since June of 2022 fueled a 2.5% weekly hike in mortgage applications, the MBA stated.

The opposite can be said of the rental market, which is seeing increased supply amid new construction and migration slowing, McBride noted. "The rent picture is better of late," he said. "Supply and demand is not as out of whack as it was coming out of the pandemic. Asking prices are no higher than a year ago."

Frustrated, aspiring homeowners could benefit, McBride said.

"Rather than stretch to buy a place now, you're better off taking 18 months to pay down debt, boost savings and see another promotion at work," he advised. "Homeownership will be much more tenable than it is today. You can do a lot worse than renting in the interim."

While there are now fewer home purchases than since the Great Recession, more inventory will eventually become available as people move on, whether marrying, divorcing, having a baby or relocating for work, Fairweather said. People should focus on their personal circumstances and "not worry about the timing of the market, because the market is really hard to time."

Residential real estate tends to go through spurts, McBride added. 

"Home prices go up rapidly for two or three years, then they don't change a lot for six to 10 years," he said. "There's some reassurance in that for the aspiring homeowner that has seen prices go up dramatically that it's not into perpetuity." 

Affluent Americans who can afford to pay cash are more apt to buy homes in such an expensive housing market, when the income necessary to buy a home is higher than ever before, and higher mortgage rates make buying a home in cash and avoiding interest altogether more attractive.

In dollar terms, the median down payment was $60,980 in September, according to Redfin. That's up roughly 15% from a year earlier, the biggest increase since June 2022.

In:
• Home Prices
• Mortgage Rates
• Redfin