Buying a Home in Eugene-Springfield, Part Two: Comparing Costs to IncomesJune 6, 2017 Last month we took a look at typical housing costs in Eugene-Springfield. Costs are only part of the equation, however: what people earn also varies around the state. This month we’ll take the next step by comparing the average costs we arrived at with local incomes.
The graph shows median annual income for a variety of occupations in Lane County. These are graphed against the income level required to qualify for a loan assuming an average amount of debt for a homebuyer that we came up with in the previous article.
Based on these estimates, we would expect the median earner in many occupations to have difficulty purchasing a house, including the median for all occupations in Lane County, represented by the red bar in the graph.
There are a few things to keep in mind when interpreting these results. First, although the midrange for many occupations falls short of the income requirements, many homebuyers have two or more incomes within their household. Median family income incorporates multiple wage earners in a family, and may in many cases be a better estimate for a household in the home purchase market. Despite the growing cost of housing, the median family income in 2015 was $57,766, which is above the estimated income required for a home with both a 10 and 20 percent down payment.
Second, other costs and requirements may prevent purchases even when income for an occupation reaches the qualifying level. Saving up enough for a down payment at the 10 percent level – in Eugene, that’s $25,000 – can be a substantial burden. In addition to price, availability of units for sale could prevent people who qualify from purchasing. On a nationwide level, housing inventory has dropped for 23 straight months year-over-year. Without a home available for purchase, a high income won’t do much good.
Finally, as in our previous analysis, median incomes conceal the variation within an occupation. By definition, half earn more than the median and half less, meaning that it is not safe to assume from these numbers that every local accountant can afford a house and that every truck driver cannot.