The Salary Needed To Buy a Home in America’s 5 Most Expensive Cities

Most people are aware of the 30% rule of thumb, which recommends no more than that much of a household’s income should be spent on housing.

But, in much of the country, the typical homebuyer would need to spend more than the recommended 30% of annual household income to afford a median-priced home in their area, according to Realtor.com® senior economic research analyst Hannah Jones.

“This is not only the case in affordable areas, but also in the country’s highest-priced towns,” says Jones.

Realtor.com economists analyzed the five most expensive towns with at least 20 listings over the past year and 5,000 to 100,000 residents.

They then determined the minimum salary you’d need to afford a median-priced home there—assuming 20% down and a 6.72% mortgage rate—when applying the 30% rule.

Priciest place in America

Over the past year, the typical home in Atherton, CA, cost $8.9 million. That would translate to a minimum recommended income of $1.85 million per year if the buyer were to take out a mortgage at today’s rate, with 20% down.

“The typical home would require more than triple the typical household income to afford,” according to Jones.

However, Jones says many buyers in ultrahigh-priced areas are not taking out a mortgage. But “if they are, [they] will put down a more substantial down payment than the typical 10% to 20%.”

Top five most expensive cities

Scroll down to check out the five most expensive cities in the United States and how much money you’d need to make to comfortably afford a house there.

1. Atherton, CA

Median listing price: $8,925,000
Median household income: $397,264
Recommended household income: $1,846,704

Atherton is in one of the country’s wealthiest ZIP codes and is a suburb of San Jose, CA. Zoning regulations in Atherton permit only one single-family home per acre.

NBA star Steph Curry lives there, and tech titan Eric Schmidt, a past Google CEO, sold his home there earlier this year for $22.5 million.

If you bought a median-priced home in Atherton with 20% down at today’s rates, your monthly payment would be $46,168—or $554,011 per year.

2. Montecito, CA

Median listing price: $6,495,000
Median household income: $208,564
Recommended household income: $1,343,904

Montecito is an exclusive town in Santa Barbara County, positioned between the Santa Ynez Mountains and the Pacific Ocean.

Prince Harry and Meghan Markle call Montecito home, and Oprah Winfrey and Gwyneth Paltrow also have homes in the chic coastal enclave.

If you bought a median-priced home in Montecito with 20% down at today’s rates, your monthly payment would be $33,598 —or $403,171 per year.

3. Malibu, CA

Median listing price: $5,924,500
Median household income: $178,910
Recommended household income: $1,225,860

Malibu is an upscale coastal city in the Santa Monica Mountains, set along the Pacific Ocean, which is renowned for its stunning beaches and some of the top surf destinations on the West Coast.

Beyoncé and JAY Z bought a Malibu mansion in 2023 for a record-breaking $190 million. Other celebrities who live in the area include Lady Gaga and Nicolas Cage.

If you bought a median-priced home in Malibu with 20% down at today’s rates, your monthly payment would be $30,647 —or $367,758 per year.

4. Hillsborough, CA

Median listing price: $5,888,000
Median household income: $414,113
Recommended household income: $1,218,307

Hillsborough is a wealthy town on the San Francisco Peninsula with tree-lined roads, majestic mansions, and well-manicured lawns.

Because it’s so close to San Francisco and Silicon Valley, it’s popular with tech giants. For instance, Elon Musk once lived there.

If you bought a median-priced home in Hillsborough with 20% down at today’s rates, your monthly payment would be $30,458—or $365,492 per year.

5. Los Altos Hills, CA

Median listing price: $5,789,000
Median household income: $361,901
Recommended household income: $1,197,823

Los Altos Hills is an affluent community just 5 miles south of Stanford University. It’s a strictly residential community that has a ban on commercial zones.

It’s a magnet for Silicon Valley’s best and brightest—including Sergey Brin, co-founder of Google, who reportedly owns two homes there.

If you bought a median-priced home in Los Altos Hills with 20% down at today’s rates, your monthly payment would be $29,945—or $359,347 per year.