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Mapped: The Salary Needed to Buy a Home in 50 U.S. Metro Areas

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This 3D Map Shows the Salary Needed to Buy a Home in 50 U.S. Metro Areas

The Salary Needed to Buy a Home in 50 U.S. Metro Areas

Over the last year, home prices have risen in 49 of the biggest 50 metro areas in the United States.

At the same time, mortgage rates have hit seven-year highs, making things more expensive for any prospective home buyer.

With this context in mind, today’s map comes from HowMuch.net, and it shows the salary needed to buy a home in the 50 largest U.S. metro areas.

The Least and Most Expensive Metro Areas

As a reference point, the median home in the United States costs about $257,600, according to the National Association of Realtors.

 Median Home PriceMontly Payment (PITI)Salary Needed
National$257,600$1,433.91$61,453.51

With a 20% down payment and a 4.90% mortgage rate, and taking into account what’s needed to pay principal, interest, taxes, and insurance (PITI) on the home, it would mean a prospective buyer would need to have $61,453.51 in salary to afford such a purchase.

However, based on your frame of reference, this national estimate may seem extremely low or quite high. That’s because the salary required to buy in different major cities in the U.S. can fall anywhere between $37,659 to $254,835.

The 10 Cheapest Metro Areas

Here are the cheapest metro areas in the U.S., based on data and calculations from HSH.com:

RankMetro AreaMedian Home PriceMonthly Payment (PITI)Salary Needed
#1Pittsburgh$141,625$878.73$37,659.86
#2Cleveland$150,100$943.55$40,437.72
#3Oklahoma City$161,000$964.49$41,335.41
#4Memphis$174,000$966.02$41,400.93
#5Indianapolis$185,200$986.74$42,288.92
#6Louisville$180,100$987.54$42,323.15
#7Cincinnati$169,400$1,013.37$43,429.97
#8St. Louis$174,100$1,031.70$44,215.56
#9Birmingham$202,300$1,040.51$44,593.35
#10Buffalo$154,200$1,066.29$45,698.05

After the dust settles, Pittsburgh ranks as the cheapest metro area in the U.S. to buy a home. According to these calculations, buying a median home in Pittsburgh – which includes the surrounding metro area – requires an annual income of less than $40,000 to buy.

Just missing the list was Detroit, where a salary of $48,002.89 is needed.

The 10 Most Expensive Metro Areas

Now, here are the priciest markets in the country, also based on data from HSH.com:

RankMetro AreaMedian Home PriceMonthly Payment (PITI)Salary Needed
#1San Jose$1,250,000$5,946.17$254,835.73
#2San Francisco$952,200$4,642.82$198,978.01
#3San Diego$626,000$3,071.62$131,640.79
#4Los Angeles$576,100$2,873.64$123,156.01
#5Boston$460,300$2,491.76$106,789.93
#6New York City$403,900$2,465.97$105,684.33
#7Seattle$489,600$2,458.58$105,367.89
#8Washington, D.C.$417,400$2,202.87$94,408.70
#9Denver$438,300$2,139.02$91,672.45
#10Portland$389,000$1,987.37$85,173.08

Topping the list of the most expensive metro areas are San Jose and San Francisco, which are both cities fueled by the economic boom in Silicon Valley. Meanwhile, two other major metro areas in California, Los Angeles and San Diego, are not far behind.

New York City only ranks in sixth here, though it is worth noting that the NYC metro area extends well beyond the five boroughs. It includes Newark, Jersey City, and many nearby counties as well.

As a final point, it’s worth mentioning that all cities here (with the exception of Denver) are in coastal states.

Notes on Calculations

Data on median home prices comes from the National Association of Realtors and is based on 2018 Q4 information, while national mortgage rate data is derived from weekly surveys by Freddie Mac and the Mortgage Bankers Association of America for 30-year fixed rate mortgages.

Calculations include tax and homeowners insurance costs to determine the annual salary it takes to afford the base cost of owning a home (principal, interest, property tax and homeowner’s insurance, or PITI) in the nation’s 50 largest metropolitan areas.

Standard 28% “front-end” debt ratios and a 20% down payments subtracted from the median-home-price data are used to arrive at these figures.

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Agriculture

Cocoa: A Bittersweet Supply Chain

The cocoa supply chain is a bittersweet one. While chocolate is a beloved sweet treat globally, many cocoa farmers are living a bitter reality.

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Cocoa: A Bittersweet Supply Chain

From bean to bar, the cocoa supply chain is a bittersweet one. While the end product is something most of us enjoy, this also comes with a human cost.

Based on how much cocoa comes from West Africa, it’s likely that most of the chocolates we eat have a little bit of Cote d’Ivoire and Ghana in them. The $130B chocolate industry relies on cocoa farming for supply of chocolate’s key ingredient. Yet, many cocoa farmers make less than $1/day.

The above graphic maps the major trade flows of cocoa and allows us to dive deeper into its global supply chain.

From Bean to Bar: Stages in the Cocoa Supply Chain

Cocoa beans go through a number of stages before being used in chocolate products.

  1. Harvesting, Fermenting, and Drying
    First, farmers harvest cocoa beans from pods on cacao plants. Next, they are fermented in heaps and covered with banana leaves. Farmers then dry and package the cocoa beans for domestic transportation.
  2. Domestic Transportation, Cleaning, and Exporting
    Domestic transporters carry packaged cocoa beans to either cleaning warehouses or processing factories. Cocoa beans are cleaned and prepared for exports to the chocolate production hubs of the world.
  3. Processing and Chocolate Production
    Processing companies winnow, roast, and grind cocoa beans and then convert them into cocoa liquor, cocoa butter, or cocoa cakes—which are mixed with other ingredients like sugar and milk to produce chocolate products.

Cocoa farming and trade are at the roots of the chocolate industry, and the consistent supply of cocoa plays a critical role in providing us with reasonably-priced chocolate.

So where exactly does all this cocoa come from?

The Key Nations in Cocoa’s Global Supply Chain

Growing cocoa has specific temperature, water, and humidity requirements. As a result, the equatorial regions of Africa, Central and South America, and Asia are optimal for cocoa farming.

These regions host the biggest cocoa exporters by value.

Rank (2019)Exporting CountryValue (US$, millions)
1Côte d’Ivoire 🇨🇮$3,575
2Ghana 🇬🇭
$1,851
3Cameroon 🇨🇲$680
4Ecuador 🇪🇨$657
5Belgium 🇧🇪$526

Côte d’Ivoire and Ghana are responsible for 70% of global cocoa production, and cocoa exports play a huge role in their economies. Although the majority of exporters come from equatorial regions, Belgium stands out in fifth place.

On the other hand, most of the top importers are in Europe—the Netherlands and Germany being the top two.

Rank (2019)Importing CountryValue (US$, millions)
1Netherlands 🇳🇱$2,283
2Germany 🇩🇪$1,182
3U.S. 🇺🇸$931
4Malaysia 🇲🇾$826
5Belgium 🇧🇪$719

In third place, the U.S. primarily sources its cocoa from Côte d’Ivoire, Ghana, and Ecuador. Mars, Hershey, Cargill, and Blommer—some of the world’s biggest chocolate manufacturers and processors—are headquartered in the U.S.

Finally, it comes as no surprise that the biggest importers of cocoa beans are among the biggest chocolate exporters.

Rank (2019)CountryValue of Chocolate Exports
(US$, millions)
1Germany 🇩🇪$4,924
2Belgium 🇧🇪$3,143
3Italy 🇮🇹$2,100
4Netherlands 🇳🇱$1,992
5Poland 🇵🇱$1,834

Not only is the Netherlands the biggest importer of beans, but it’s also the biggest processor—grinding 600,000 tons annually—and the fourth largest exporter of chocolate products.

Belgium is another key nation in the supply chain, importing cocoa beans from producing countries and exporting them across Europe. It’s also home to the world’s largest chocolate factory, supporting its annual chocolate exports worth $3.1 billion.

Breaking Down the Cocoa Supply Chain: Who Gets What

Without farmers, both the cocoa and chocolate industries are likely to suffer from shortages, with domino effects on higher overall costs. Yet, they have little ability to influence prices at present.

cocoa supply chain breakdown

Farmers are among the lowest earners from a tonne of sold cocoa—accounting for just 6.6% of the value of the final sale.

Low incomes also translate into numerous other issues associated with cocoa farming.

The Bitter Side of Cocoa Farming

The World Bank has established the threshold for extreme poverty at $1.90/day. Cocoa farmers in Ghana make $1/day, while those in Côte d’Ivoire make around $0.78/day—both significantly below the extreme poverty line.

Farmers are often unable to bear the costs of cocoa farming as a result of low incomes. In turn, they employ children, who miss out on education, are exposed to hazardous working conditions, and get paid little or no wages.

CountryCocoa Farmers Making $1/day or lessChildren in Cocoa Agriculture
Côte d’Ivoire 🇨🇮600,000
891,500
Ghana 🇬🇭800,000708,400

To make matters worse, cocoa farming is primarily responsible for deforestation and illegal farming in Côte d’Ivoire and Ghana—adding environmental issues to the mix.

These interconnected problems call for action, so what is being done to fight them?

Combating Cocoa’s Concerns

Mars, Nestlé, and Hershey—some of the world’s biggest chocolate manufacturers—have made several pledges to eradicate child labor in cocoa farming over the last two decades, but haven’t reached their targets.

In addition, organizations such as UTZ Certified, Rainforest Alliance, and Fairtrade are working to increase traceability in the supply chain by selling ‘certified cocoa’, sourced from farms that prohibit child labor.

More recently, Côte d’Ivoire and Ghana announced a fixed premium of US$400/tonne on cocoa futures, aiming to improve farmer livelihoods by creating a union for cocoa, also known colloquially as the “COPEC” for the industry.

While these initiatives have had some positive impacts, more still needs to be done to successfully eradicate large-scale child labor and poverty of those involved in cocoa’s bittersweet supply chain.

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Mining

Volatile Returns: Commodity Investing Through Miners and Explorers

The companies that mine or explore for metals offer additional leverage to commodity prices, creating opportunities for astute investors.

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Volatile Returns: Commodity Investing Through Miners

Investors consider gold and silver as safe haven investments. But the companies that produce gold and silver often offer volatile returns, creating opportunities for astute investors.

Volatility is a double-edged sword, particularly when it comes to commodity investing. During the good times, it can create skyrocketing returns. But during bad times, it can turn ugly.

Today’s infographic comes to us from Prospector Portal, and shows how investing in precious metals equities can outperform or underperform the broader metals market.

Capitalizing on Volatility: Timing Matters

Just like most investments, timing matters with commodities.

Due to the complex production processes of commodities, unexpected demand shocks are met with slower supply responses. This, along with other factors, creates commodity supercycles—extended periods of upswings and downswings in prices.

Investors must time their investments to take advantage of this volatility, and there are multiple ways to do so.

Three Ways to Invest in Commodities

There are three primary routes investors can take when it comes to investing in commodities.

Investment MethodBenefitsLimitations
Direct physical investment
  • Purest form of exposure

  • Intrinsic value of a commodity and physical possession
  • High transaction costs (buying, shipping, transport)

  • Costs of physical storage limit the quantity and returns
Commodity futures
  • Commodity investment without the need for storage

  • Diversification benefits and inflation hedge
  • Complex and frequent transactions

  • Risk of contango—when futures contracts are more expensive than the underlying commodity
Commodity-related equities
  • Exposure to prices without storage or transaction limitations

  • Opportunity to benefit from commodity prices and company performance
  • Returns depend on the company’s valuation

  • Companies may mitigate risk by producing multiple commodities—reducing leverage to prices

Among these, commodity-related equities offer by far the most leverage to changes in prices. Let’s dive into how investors can use this leverage to their advantage with volatile metal prices.

The Fundamentals of Investing in Mining Equities

When it comes to commodity investing, targeting miners and mineral exploration companies presents fundamental benefits and drawbacks.

As metal prices rise, the performance of mining companies improves in several ways—while in deteriorating conditions, they do the opposite:

CategoryRising Commodity PricesFalling Commodity Prices
Outlook- Improved outlook- Deteriorated outlook
Stock Price Movement- Equity growth- Equity decline
Dividend Payouts- Increased dividends- Decreased dividends
Financial Performance- Increased earnings- Decreased earnings

With the right timing, these ups and downs can create explosive opportunities.

Mining companies, especially explorers, use these price swings to their advantage and often produce market-beating returns during an upswing.

But how?

The Proof: How Mining Equities React to Metal Prices

Not only do price increases translate into higher profits for mining companies, but they can also change the outlook and value of exploration companies. As a result, investing in exploration companies can be a great way to gain exposure to changing prices.

That said, these types of companies can generate greater equity returns over a shorter period of time when prices are high, but they can also turn dramatically negative when prices are low.

Below, we compare how producers and exploration companies with a NI-43-101 compliant resource perform during bull and bear markets for precious metals.

All figures are in U.S. dollars unless otherwise stated.

Mining CompanyCompany StagePrimary Metal
Produced
Market Cap.
Oct 31, 2019
Market Cap.
July 29, 2020
Bull Market Performance
(Nov. 1, 2019-July 29, 2020)
Bear Market Performance
(Jan 02 – Dec 31, 2018)
Banyan GoldExploration/
Development
Gold$6M$40M500%-44%
Renforth ResourcesExplorationGold$8M$10M11%-10%
Auryn ResourcesExplorationGold, Copper$181M$330M60%-39%
Wesdome Gold Mines Ltd.ProductionGold$1,104M$1,885M68%110%
Monarch GoldExploration/
Development
Gold$57M$148M139%-23%
Red Pine ExplorationExplorationGold$13M$22M29%-55%
Revival Gold Inc.Exploration/
Development
Gold$27M$74M113%5%
Erdene Resource DevelopmentExploration/
Development
Gold$36M$111M222%-56%
Endeavor Mining Corp.ProductionGold$2,622M$5,874M54%-13%
Yamana Gold IncProductionGold$4,572M$8,279M87%-22%

During the bear market period, the price of gold declined by 2.66%, and despite engaging in exploration activity, most companies saw a slump in their share prices.

In particular, exploration companies, or juniors, took a heavier hit, with returns averaging -31.66%. But even during a bear market, a discovery can make all the difference—as was the case for producer Wesdome Gold Mines, generating a 109.95% return over 2018.

  • Average returns for gold producers including Wesdome: 24.83%
  • Average returns for gold producers excluding Wesdome: -17.65%

During the bull market period for gold, gold mining companies outperformed the price of gold, with juniors offering the highest equity returns averaging 153.43%. Gold producers outperformed the commodity market, the value of their equities increased 69.61%—less than half of that of exploration companies.

Silver: Bears vs Bulls

Similar to gold mining companies, performances of silver producers and explorers reflected the volatility in silver prices:

CompanyCompany StagePrimary Metal
Produced
Market Cap.
Oct 31, 2019
Market Cap.
July 29, 2020
Bull Market Performance (Nov. 1, 2019-July 29, 2020)Bear Market Performance (Jan 02 – Dec 31, 2018)
Silvercrest MetalsExplorationSilver$694M$1,449M78%117%
Pan American SilverProductionSilver$2,973M$10,550M125%1%
Golden MineralsExplorationSilver$30M$80M80%-42%
Americas Gold and SilverProductionSilver$335M$482M10%-56%
Dolly Varden Silver Corp.ExplorationSilver$28M$74M152%-32%
Endeavour SilverProductionSilver, Gold$458M$837M72%-10%

During the bear market period for silver, its price decreased by 9.8%. Explorers and producers both saw a dip in their share prices, with the equity of silver producers decreasing by 21.63%.

However, the discovery of a high-quality silver deposit again made the difference for SilverCrest Metals, which generated a 116.85% return over the year.

  • Average returns for silver exploration companies including SilverCrest: 8.32%
  • Average returns for silver exploration companies excluding SilverCrest: -27.86%

On the other hand, during the bull market period, the price of silver increased by 34.33%. Silver exploration companies surpassed the performance of the price of silver.

  • Average returns for silver producers: 69.04%
  • Average returns for silver exploration companies: 95.36%

The potential to generate massive returns and losses is evident in both cases for gold and silver.

The Investment Potential of Exploration

Mining equities tend to outperform underlying commodity prices during bull markets, while underperforming during bear markets.

For mining exploration companies, these effects are even more pronounced—exploration companies are high-risk but can offer high-reward when it comes to commodity investing.

To reap the rewards of volatile returns, you have to know the risks and catch the market at the right time.

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