How Much Money You Need to Make to Afford a Median Price Home in Hawaii?
There was an article recently about how much you need to make to afford a $600K home. I thought it would be interesting to tailor this for residents of Hawaii, specifically Honolulu County, in this current market. High inflation, increasing interest rates, and perpetually low inventory makes Hawaii an especially challenging market.
The most recent Market Insights from Redfin shows that the median sale price of a single family home in Honolulu County is $1,040,000. Down 10.3% from their peak set in March 2022. However, prices increased 35.3% between 2021 and 2022 after remaining relatively flat in the years prior to 2020.
How much do you need to make to afford a median price home in Hawaii?
As a general guideline, you shouldn’t spend more than 28% of your pre-tax monthly income on your mortgage.
Say you’re interested in purchasing a single family home in Honolulu County.
Median Sale Price: $1,040,000
Down Payment: $208,000
Loan Term: 30-yr fixed jumbo
Loan Interest Rate: 5.68% (The average rate s of February 13, 2023)
Your total monthly mortgage payment would be $4,818 per month.
To calculate how much your gross income would need to be to be below the 28% threshold and comfortably afford a home in Hawaii, you would need to divide the total monthly mortgage payment by 28% ($4,818 x 0.28 = $17,207) and multiply by 12.
This means that you or your household combined would need to make a minimum $206,503 per year - or $17,207 per month - to comfortably afford a single family home in Hawaii. It’s important to note that this is a very general example. Property taxes, homeowner’s insurance, and HOA fees all would need to be included in the 28%.
Key takeaways:
The per capita income in Honolulu County is $40,339. That means it will take 5 working individuals under one household making at least the median income to afford a single family home.
There are only four occupational areas in Hawaii that would provide a couple the typical annual salary to afford a home in Hawaii without the help of a multi-generational household. Those are: Healthcare Practitioners, Engineering, Tech, and Management positions in larger companies.