Even in a softer native market, you continue to have to make nicely above $100,000
Austin, TX, is a metropolis wealthy in tradition, occasions, outside recreation, and unbelievable delicacies. Along with being a preferred place to reside, Austin can be house to a reasonably aggressive actual property market that’s seen vital change in recent times.
For a lot of, shopping for a house in Austin is a dream come true, nevertheless it’s additionally essential to know the way it will affect your funds. From down funds to month-to-month mortgage funds, there’s so much to know earlier than shopping for your first house
So whether or not you already reside in ATX or wish to relocate to the world, right here’s a breakdown of the revenue you’ll have to buy your first house in Austin.
Take a look at our unique report for an in depth nationwide evaluation.
How a lot revenue do you’ll want to purchase a starter house in Austin?
The median sale value of a starter house in Austin is $330,000. So as to afford this, first-time homebuyers in Austin ought to make $118,201 per 12 months, up 0.7% from 2023. Nonetheless, the median revenue in Phoenix is $104,076, which means the standard resident usually can’t afford a starter house.
As anticipated, starter properties in Austin are extra reasonably priced than the typical house (all value brackets mixed; see methodology for particulars). So as to afford any median-priced house within the space, you’ll have to make $126,208 (as of October 2023).
Nationwide, you want an revenue of $75,849 to afford a typical starter house, which prices a median of $240,000. The common U.S. family earns an estimated $84,072.
First-time homebuyers’ information to the Austin housing market
Austin’s housing market has gone by ups and downs prior to now 4 years, with fast progress adopted by sharp declines.
At the start of the pandemic, the town was one of the crucial well-liked migration locations for coastal homebuyers looking for sunshine and affordability. In truth, the town was the outright hottest metro for relocating homebuyers on the finish of 2020, which continued into 2021. This exceptional reputation boosted home costs by over $200,000 from January 2021 to Might 2022.
Nonetheless, this fast rise priced some individuals out of the market and precipitated home costs to fall. Individuals additionally stopped seeking to transfer into the town, and by the top of 2023, Austin misplaced homebuyers for the primary time on document.
As of April 2024, home costs are sitting at $550,000, a 17.8% drop from their Might 2022 peak. The Austin-San Antonio metropolitan space remains to be anticipated to develop to 8.3 million individuals by 2050.
The capital of Texas is house to many facilities and sights all through its neighborhoods, just like the Bullock Texas State Historical past Museum, Barton Springs Pool, and Citadel Hill. Some well-liked neighborhoods in Austin embrace Crestview, Allandale, and South Congress.
What does a typical down fee appear like for a starter house in Austin?
Listed below are some widespread down fee quantities for a typical $330,000 starter house in Austin:
Down fee proportion | Down fee quantity |
3% down fee | $9,900 |
3.5% down fee | $11,550 |
5% down fee | $16,500 |
10% down fee | $33,000 |
15% down fee | $49,500 |
20% down fee | $66,000 |
Down funds can vary from 0% to 100% of the full home value, relying in your funds, mortgage kind, and long-term priorities. Whereas specialists have traditionally beneficial budgeting for a 20% down fee, the growing value of properties and continued sluggish wage will increase has led to a 15% down fee changing into extra widespread.
Some mortgage varieties enable for decrease down fee quantities. For instance, a Federal Housing Administration (FHA) mortgage requires simply 3.5% down, whereas the bottom doable down fee for a standard mortgage is 3%. These quantities usually rely in your credit score scores, so patrons with increased credit score scores might qualify for decrease down funds.
What’s the typical mortgage fee for a starter house in Austin?
The standard month-to-month mortgage fee for a starter house in Austin is $2,955. This assumes you set 3.5% down and have round a 7% rate of interest.
If this fee sounds too excessive, you possibly can contemplate renting an house in Austin. The common hire value is $2,216, probably making it a greater possibility when you save for a down fee on a home. You may as well use an affordability calculator to see what you possibly can afford based mostly in your revenue and down fee.
What do you have to do subsequent?
When you’re out there on your first house in Austin, it’s essential to know how a lot home you possibly can afford. Take your annual revenue, credit score rating, the present mortgage charges, and native market developments to decide that works greatest for you.
From there, an Austin agent may help you navigate the complete house shopping for course of and supply beneficial native experience. To study extra about tips on how to purchase a house, try Redfin’s First-Time Homebuyer’s Information.
Methodology
Redfin divides all U.S. properties into 5 buckets based mostly on Redfin Estimates of properties’ market values. There are three equal-sized tiers, in addition to tiers for the underside 5% and high 5% of the market. Redfin defines “starter properties” as properties whose sale value fell into the Fifth-Thirty fifth percentile of the Redfin Estimate tier.
We calculated the annual revenue wanted to afford a starter house by assuming a purchaser spends not more than 30% of their revenue on housing funds. Housing funds are calculated assuming the customer made a 3.5% down fee and in addition take a month’s median sale value and common mortgage-interest charge under consideration.
The nationwide revenue knowledge is adjusted for inflation utilizing the Shopper Worth Index. 2024 revenue is estimated based mostly on projections from the U.S. Census Bureau’s (ACS) 2022 median family revenue utilizing the 12-month shifting common nominal wage progress charge. The speed was compiled from the Present Inhabitants Survey and reported by the Federal Reserve Financial institution of Atlanta.
We assume housing funds embrace the mortgage principal, curiosity, property taxes, owners insurance coverage, and mortgage insurance coverage (when relevant).
All knowledge sourced February 2024 except in any other case acknowledged.