An ‘affordable home’ people can’t afford

If you only made about $34,000 a year, can you afford a home in the Twin Cities costing almost $200,000?

Most anyone who’s ever actually owned a home knows the answer is “no,” but the people who make money in the housing industry are inflating expectations. Again., a mortgage advice website, has released its list of top 25 American cities and the amount of house people can minimally afford, the Star Tribune reports.

Cleveland is the most affordable, according to the website. Someone making $19,435.17 a year can “afford” a $113,000 home with its $453 payment for principal and interest.

Minneapolis comes in at #12, with its $788.67 payment on the $197,000 home.

“Last quarter, Minneapolis had the highest interest rate on our list. This quarter, they’re in the middle of the pack. Lower rates and home prices during the fourth quarter helped affordability conditions, as the required salary dropped more than $3,300,” the blog’s author said.

This is how people get sucked into making bad decisions about buying a home, and a little simple math proves it.

A $34,000 salary nets you $2,833 a month. After income taxes, assuming a married couple with no kids, the take-home pay is $2,268.38. That also assumes no other deductions, such as a contribution to a retirement account, are made.

Health insurance is mandatory now and you’ll pay about $350 a month for a “bronze plan” in Minnesota. Property taxes in Minneapolis would take another $300 of that, leaving about $1,600. Homeowners insurance would run about $58 per month. The average American food bill for a couple is about $500 a month. That brings us to $1,042.

You could buy a house and still have $253 left, which, of course, isn’t enough for a car payment(s), fuel, cable, phone, electricity, clothes, heat, medical deductibles and expenses, and, of course, any actual maintenance on the home to protect your investment. And children.

That’s some deal.