Revealed: The salary needed to buy a home in America's 5 most expensive cities
Americans would need a salary of over $1 million to be able to afford a to buy a home in the five most expensive cities in the country.
That is according to new research from Realtor.com, which determined how much a budding homeowner would need to earn to buy a typical property in the priciest towns, which are all located in California.
The study assumed a buyer would put down a 20 percent down payment, and applied a 6.72 percent mortgage rate to the calculations.
In order to work out the necessary salary, Realtor.com economists used the so-called 30 percent rule.
This is the idea that Americans should not spend more than 30 percent of their income on housing.
Atherton, California, required the highest salary to be able to afford a typical home while maintaining this benchmark - at a whopping $1.85 million.
That is because over the last year, the average property in the town cost $8.9 million.
'The typical home would require more than triple the typical household income to afford,' said Realtor.com senior economic research analyst Hannah Jones.
Atherton, California, required the highest salary to be able to afford a typical home - at a whopping $1.85 million (Pictured: A home in the town in 2020)
Atherton, which is a suburb of San Jose, is one of the wealthiest ZIP codes in the US, with a median household income of $397,264, according to Realtor.com.
Zoning regulations in the town mean that only one single-family home can be built per acre, meaning many of the properties are large and sprawling.
The town is home to NBA star Steph Curry, and Eric Schmidt, a former Google CEO, sold his home there earlier this year for $22.5 million.
According to the study, an American who bought a median-priced home in the town would have a monthly mortgage payment of $46,168.
The second most expensive town to buy a home in is Montecito, California, where stars such as Oprah Winfrey and Gwyneth Paltrow have properties.
If you wanted to have these A-listers as neighbors, you would have to earn a salary of around $1.3 million, according to Realtor.com.
The median listing price in the town this year, which Prince Harry and Meghan Markle also call home, was a huge $6,495,000.
Third on the list is Malibu, which is renowned for its beautiful beaches and celebrity residents.
This year, Americans would need to earn over $1.2 million to afford a home in the upscale coastal city.
If you bought a median-priced home in Malibu with 20 percent down at today's rates, according to Realtor.com, your monthly payment would be $30,647.
The study assumed a buyer would put down a 20 percent down payment, and applied a 6.72 percent mortgage rate to the calculations
The second most expensive town to buy a home in is Montecito, California
The median listing price in Montecito this year, which Prince Harry and Meghan Markle call home, was a huge $6,495,000
This year, Americans would need to earn over $1.2 million to afford a home in the upscale coastal city of Malibu
Next on the list is Hillsborough, a wealthy town close to San Francisco and Silicon Valley, which is popular with tech workers.
This year, the median listing price in the town was over $5.8 million, which means you would also need to earn over $1.2 million to afford to buy a house there.
In Los Altos Hills, which was fifth on the list of expensive towns, the average home sold for just over $5.7 million this year.
The affluent town, which is just five miles south of Stanford University, is a strictly residential community that has a ban on commercial zones.
To buy a home there, you would need to earn $1,197,823, according to Realtor.com, and would have a monthly mortgage payment of $29,945.
It comes as house prices have continued to climb this year, due to a historic shortage of homes for sale.
Mortgage rates have remained elevated, deterring homeowners from moving and letting go of lower deals.
However, economic research analyst Jones points out that many ultra-wealthy homebuyers are not taking out a mortgage at all, and are instead buying in cash.
'If they are, [they] will put down a more substantial down payment than the typical 10 percent to 20 percent,' she said.
