Great infographic from HowMuch.net showing how much you need to earn annually in order to buy a home in the 50 largest U.S. markets. Since housing is typically the largest cost item in consumer budgets (either rent or mortgage payments), it's important for young people to understand how cost of living can vary so dramatically. 

Here's the methodology for the chart:

"To keep things simple, they determined what salary would be needed to afford each home using the 28 percent “front-end” debt ratio, meaning the total housing payment could not make up more than 28% of gross income. They also assumed a 20% down payment.

Questions for your students: 

• Find the nearest city to your school (or the city that your school is located in, if it is one of the top 50) and jot down what salary you need in order to buy a home. 
  • Next check out this interactive to find the median income in that same city. 
  • Do you think most people in that city can afford to purchase a home? 
• What are the most expensive housing markets in the map above? The least expensive? 
• What do you think are the factors that determine the cost of housing in a given city? Come up with at least 3. 
• Why do you think that most experts believe that you should NOT have a monthly loan payment (mortgage) for your home that is less than 30% of your income? 
• Do you see any patterns in the data above? Are there regional differences that you can discern?

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Want to dive in deeper and teach your students about mortgages? Check out the NGPF Lesson on Mortgages in our Types of Credit Unit!

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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