• Workers in similar jobs can afford very different shares of homes depending on where they live across the country.
• Incomes for workers in similar jobs vary widely across metros, but so does the share of income households are accustomed to dedicating to their mortgage payment.

In general, buying a home today is incredibly affordable. But when it comes down to it for individual buyers, there’s a lot more to buying an affordable home than just the final price.

A buyer’s job, where they’re looking to live and how much of their paycheck they’re willing to devote to a mortgage payment all play a significant role in helping define “affordability” for individual homebuyers. And finally, there’s the question of actually finding a home listed for sale within a given buyer’s budget – often no easy task in today’s market.

Depending on where they live, workers in similar occupations can often take home very different incomes:

• Legal workers – including lawyers, judges, judicial clerks, adjudicators, hearing officers, arbitrators, mediators, conciliators and magistrates – the median annual income in the San Jose metro is $158,000, compared to $5,000 in the Fort Wayne, Indiana, metro area. Much of this difference can be attributed to the types of legal workers living in the two areas. In San Jose, the group is composed largely of lawyers serving the tech industry. In Fort Wayne, these workers are mostly adjudicators, hearing officers and mediators.
• Among law enforcement workers – including bailiffs, correctional officers, detectives, parking enforcement workers, police officers, transit police, and fish and game wardens – the median income in Jackson, Mississippi, is about $27,000 per year. But in Santa Rosa, Calif., in the heart of Northern California’s upscale Sonoma County wine country – the typical law enforcement worker makes about $96,000.

But differences in incomes alone do not explain the wide differences in mortgage affordability for workers across the country. In different metros, households are accustomed to dedicating different shares of their income to mortgage payments. Looking at the historic (1985-1999) average share of household income spent on mortgage payments, there is a wide range across metros:

• At the upper extreme, households in San Francisco, Honolulu, San Jose and Los Angeles are accustomed to dedicating upward of 35 percent of their income to their mortgage payment.
• At the bottom end, in Saginaw, Michigan, Amarillo, Texas, and Augusta, Georgia, households are used to spending less than 14 percent of their income on their mortgage.

These differences in the housing-cost burden people are used to bearing can have large impacts on the maximum home price that workers in similar occupations may be willing to pay while still considering a home affordable:[1]

• Funeral service workers – including embalmers, morticians, funeral attendants, undertakers and funeral directors – in the New York City area can afford homes up to $913,000 without paying more of their income than they’re accustomed to. Their peers in the Philadelphia metro can afford homes up to $158,000.
• Mathematical science workers – which includes actuaries, mathematicians and statisticians – in Rochester, New York, can afford homes up to $191,000 without paying more than their historic average, while their colleagues in San Francisco can afford homes up to $748,000.

But sometimes wide differences in home values from market-to-market can expand or limit the options available when buying a home:

• While mathematical science workers in San Francisco can afford homes almost four times more expensive than their peers in Rochester, those price thresholds cover only about 48 percent of San Francisco homes, compared to about 78 percent of Rochester homes.
• Among pre-school, primary, secondary and special education teachers, less than 5 percent of homes are affordable in San Jose. But in nearby Merced, almost 95 percent of homes are affordable.
• For metal and plastic workers, only 2 percent of homes are affordable in Vallejo, California, compared to 87 percent of homes in Monroe, Michigan.

Explore figure 1 below to see the share of all homes – regardless of whether they are on the market or not – that are affordable for workers in different occupations across the country. Figure 2 allows you to view the share of active listings (as of September 1, 2015) that are affordable for workers in five key occupations across ZIP codes in 12 large metro areas.

Methodology

For each of the largest 100 metro areas in the United States, we computed the median income for civilian workers by occupation group using data from the U.S. Census Bureau’s American Community Survey (ACS), made available by the University of Minnesota’s Integrated Public-Use Microdata Series (IPUMS-USA). To focus on employment income, we included only wage and salary income. This includes wages, salaries, commissions, cash bonus, tips and other income received from an employer, excluding payments-in-kind or reimbursements for business expenses.

The federal government groups occupations into a hierarchical system known as the Standard Occupational Classification (SOC). These occupational groups are revised periodically; we used data from 2010. There are four nested levels – major occupation groups, minor occupation groups, broad occupation groups and detailed occupation groups – with each subsequent level including a narrower range of jobs. (View the hierarchy here.)

In order to ensure a sufficient sample size[2] for most occupations in most metros areas, we used a pooled sample of data from the 2012 and 2013 American Community Surveys, and conducted our analysis at the minor occupation group level.

To adjust reported incomes for inflation, we computed the growth in incomes using data from the 2012, 2013, and 2014 Annual Socio-economic Supplement to the Current Population Survey (CPS), also published by IPUMS-USA. Because of the smaller sample size of the CPS, we were only able to do this at the major occupation group level, and for the United States as a whole. Occupations in the CPS are classified using a slightly different hierarchy, so we used a crosswalk between the CPS occupation codes and the SOC codes provided by the Census Bureau. We then applied the growth in nationwide incomes at the major occupation group level to incomes for all subordinate minor occupation groups reported in the ACS (for simplicity, going forward we refer to “minor occupation groups” as “occupations”). After inflation-adjustment, these incomes correspond roughly to the income workers earned in 2014.

Using these median incomes, we then calculated the maximum home price that the typical worker in each occupation and each metro could afford. We assume that a home is purchased with 20 percent down using a 30-year, fixed rate loan at a 4 percent interest rate – slightly above current mortgage rates, but in line with rates over the past year. We also assume that homebuyers are willing to dedicate a proportion of their income to their mortgage payment that is consistent with the historical experience – the average ratio between 1985 and 1999 – in their metro.

For single-earner households, we assume that the only household income is the median income corresponding to that occupation and that metro. For dual-earner households, we assume that the household is composed of one worker with the median income for that occupation, and a second worker who earns the median income for all workers in that metro area.

Finally, for each metro and occupation we calculated:

• The share of all homes whose value (Zestimate) falls below the maximum home price affordable
• The share of active listings on Zillow as of September 1, 2015, whose list price falls below the maximum home price affordable.[3]

[1] These maximum home prices are for single-earner households.

[2] We excluded occupations with less than 15 unweighted responses in the ACS.

[3] In the ZIP code analysis, we excluded ZIP codes with fewer than 10 active listings.