Can You Afford a House in the Hottest Residential Market in the US?

According to data provided by Zillow in August, the city of Irvine, California, is the hottest residential market in the U.S., based on price appreciation over the past year. While located in beautiful Southern California, Irvine is not blessed with a beachfront location but still has the amenities that make it a very popular place to live.

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So, what exactly is the housing situation in the hottest market in America, and what would it take to afford to live there ?

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Median Home Price and Appreciation in Irvine

Housing prices in Irvine skyrocketed 20.8% over the past year, the highest of any city in the nation. The median-priced home in Irvine now sits at a lofty $1.56 million. According to the Federal Reserve Bank of St. Louis, the median sales price for homes sold in the U.S. in the second quarter of 2024 was $412,300. This means houses in Irvine are nearly four times the price of the national median. Irvine’s home prices are high even in pricey California, roughly double the state average price of $784,989.

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Reasons for Irvine’s Success and Popularity

Part of the reason for Irvine’s dramatic surge in pricing is the flood of new residents that have arrived in the city. Over the past three years, Irvine’s population has jumped by more than 13,000, the most of any city in the state. Irvine’s 315,000 residents make the city the 13th-largest in California, and the demand for homes has been high.

Part of Irvine’s appeal is its low crime rate. According to FBI data, Irvine has had the lowest violent crime rate per capita for cities of 250,000 or more residents for 18 consecutive years, an impressive statistic. The overall crime rate is about 33% less than the national average, and its violent crime rate is nearly 90% lower than the national average.

The features and amenities of Irvine are another reason for its popularity. Offering the pleasant Mediterranean climate that Southern California is known for around the world, Irvine offers year-round recreation, in addition to world-class museums, parks and an excellent school system, according to Sperling’s BestPlaces.

Sample Listings in Irvine

Here’s what you can currently get in Irvine for a price around the median of $1.56 million in the area:

• At 163 Rhapsody you can buy a 1,691-square-foot, 3-bed, 3-bath condo for $1.595 million.
• If you prefer a stand-alone home, $1.58 million will get you a 4-bed, 3-bath, 2,038-square-foot house at 3551 Marin Drive .
• Another sample home listing is at 155 Carmine , where you can avail a 3-bed, 3-bath home with 1,906 square feet of living space for $1.58 million.

Of course, there are plenty of listings at both lower and higher prices, but these are examples of what you can get for about the median home price in Irvine.

How Much Would You Have To Earn To Afford a Home in Irvine?

There are various ways to determine just how much you have to earn to afford a home of a certain price. According to Chase Bank, most advisors recommend that you spend no more than 28% of your monthly income on housing expenses. So, if you earn $5,000 per month, you shouldn’t spend more than $1,400 on your monthly mortgage.

Imagine you’re buying a $1.56 million home in Irvine and you’re putting 20% down. That will leave you with a mortgage of $1,248,000. Assuming a 30-year fixed-rate mortgage at 6.5%, that translates to a monthly payment of $8,313.21. Using the Chase Bank model, this means that you should be earning at least $29,690 per month to afford a $1.56 million home in Irvine — or roughly $356,280 per year.

This article originally appeared on GOBankingRates.com : Can You Afford a House in the Hottest Residential Market in the US?