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 unimaginable delicacies. Along with being a well-liked place to dwell, Austin can be residence to a reasonably aggressive actual property market that’s seen important change in recent times. 

For a lot of, shopping for a house in Austin is a dream come true, nevertheless it’s additionally necessary to know the way it will affect your funds. From down funds to month-to-month mortgage funds, there’s so much to grasp earlier than shopping for your first residence 

So whether or not you already dwell in ATX or want to relocate to the world, right here’s a breakdown of the revenue you’ll have to buy your first residence in Austin.

Try our authentic report for an in depth nationwide evaluation.

How a lot revenue do you might want to purchase a starter residence in Austin?

The median sale value of a starter residence in Austin is $330,000. In an effort to afford this, first-time homebuyers in Austin ought to make $118,201 per yr, up 0.7% from 2023. Nonetheless, the median revenue in Phoenix is $104,076, that means the everyday resident typically can’t afford a starter residence.

As anticipated, starter houses in Austin are extra inexpensive than the typical residence (all value brackets mixed; see methodology for particulars). In an effort to afford any median-priced residence 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 residence, 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 up to now 4 years, with speedy development adopted by sharp declines. 

At first of the pandemic, town was one of the fashionable migration locations for coastal homebuyers looking for sunshine and affordability. In truth, town was the outright hottest metro for relocating homebuyers on the finish of 2020, which continued into 2021. This outstanding reputation boosted home costs by over $200,000 from January 2021 to Might 2022. 

Nonetheless, this speedy rise priced some folks out of the market and triggered home costs to fall. Individuals additionally stopped trying to transfer into town, and by the tip of 2023, Austin misplaced homebuyers for the primary time on file. 

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 continues to be anticipated to develop to 8.3 million folks by 2050.

The capital of Texas is residence 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 fashionable neighborhoods in Austin embrace Crestview, Allandale, and South Congress.

What does a typical down cost seem like for a starter residence in Austin?

Listed here are some frequent down cost quantities for a typical $330,000 starter residence in Austin:

Down funds can vary from 0% to 100% of the full home value, relying in your finances, mortgage sort, and long-term priorities. Whereas consultants have traditionally advisable budgeting for a 20% down cost, the rising value of houses and continued sluggish wage will increase has led to a 15% down cost turning into extra frequent. 

Some mortgage varieties enable for decrease down cost quantities. For instance, a Federal Housing Administration (FHA) mortgage requires simply 3.5% down, whereas the bottom attainable down cost for a standard mortgage is 3%. These quantities sometimes rely in your credit score scores, so patrons with increased credit score scores might qualify for decrease down funds.

What’s the typical mortgage cost for a starter residence in Austin?

The everyday month-to-month mortgage cost for a starter residence in Austin is $2,955. This assumes you set 3.5% down and have round a 7% rate of interest.

If this cost sounds too excessive, you may take into account renting an condominium in Austin. The common lease value is $2,216, presumably making it a greater possibility whilst you save for a down cost on a home. You may also use an affordability calculator to see what you possibly can afford primarily based in your revenue and down cost.

What must you do subsequent?

When you’re out there to your first residence in Austin, it’s necessary to grasp 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 will help you navigate the whole residence shopping for course of and supply useful native experience. To study extra about methods to purchase a house, try Redfin’s First-Time Homebuyer’s Information.

Methodology

Redfin divides all U.S. properties into 5 buckets primarily based on Redfin Estimates of houses’ market values. There are three equal-sized tiers, in addition to tiers for the underside 5% and prime 5% of the market. Redfin defines “starter houses” as houses 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 residence 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 cost and in addition take a month’s median sale value and common mortgage-interest price into consideration. 

The nationwide revenue information is adjusted for inflation utilizing the Client Value Index. 2024 revenue is estimated primarily based on projections from the U.S. Census Bureau’s (ACS) 2022 median family revenue utilizing the 12-month shifting common nominal wage development price. 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 information sourced February 2024 until in any other case said.