In this September edition of the RealtyHop Housing Affordability Index, we examine what American households across the 100 largest cities need to spend on housing to find out:
Is homeownership affordable or possible for the average American family?
While mortgage rates have inched down, affordability challenges persist, with most major markets requiring households to spend a large share of their income on housing. However, local market conditions continue to vary widely, creating pockets of opportunity for potential buyers to take advantage of. As always, those thinking about buying should consult with local market experts to understand specific pricing in their area.
A note about this report: We adjusted our methodology to take into account both median household income growth and mortgage rate fluctuations. Please see the Methodology section below for more information.
Key Findings:
- Households in 70 out of the 100 major cities we analyzed would have to spend over 30% of their annual income to own a median home in the area.
- For 13 cities in the index, homeowners must spend over 50% of their income on homeownership costs, indicating severe unaffordability.
- This month, Toledo, OH became the most affordable housing market.
- California remains unaffordable for average Americans. 7 of the 10 least affordable markets are located in California.
- The most affordable region in the United States is the Midwest, where homeowners spend, on average, 27% of their income on housing costs.
- Buyers in Cleveland, OH, Toledo, OH, and Detroit, MI are currently the only three cities in the study where monthly homeownership payments sit below $1,000.
The 5 Least Affordable Housing Markets
1. Los Angeles, CA
Los Angeles remains the country’s least affordable housing market. The median list price slightly decreased to $1,150,000, and families can now expect to spend 87.89% of their income on monthly housing costs.
2. Irvine, CA
Irvine is the second least affordable housing market. Households with a median income can expect to spend $9,692.99 monthly on mortgage payments and property taxes, equating to 82.22% of household income.
3. Miami, FL
Miami remained the third least affordable housing market this month. Households making the median income of $64,803 will need to spend 74.27% of it towards homeownership costs
4. New York, NY
New York City held onto its spot as the fourth least affordable housing market, with the list price of $899,000. Potential buyers should expect to spend $5,047.22 monthly on homeownership costs.
5. Newark, NJ
Newark remained steady as the fifth least affordable housing market. Households should expect to direct 66.90% of their income towards purchasing a home with a median list price of $450,000
The 5 Most Affordable Housing Markets
1. Toledo, OH
Toledo became the most affordable housing market. Households making the median income of $51,864 should expect to spend $817.75 on their monthly mortgage payments and property taxes.
2. Detroit, MI
Detroit also remains one of the most affordable housing markets in the country. With a median list price of $109,900, households only need to allocate $682.93 a month on homeownership expenses.
3. St. Louis, MO
St. Louis moved up one spot in the rankings to become the third most affordable housing market. Homeowners would need to direct 22.92% of their income towards owning a home with the median price of $195,000.
4. Cleveland, OH
Cleveland dropped one spot in the rankings to become the fourth most affordable housing market this month. The median list price decreased to $129,500, with prospective buyers needing to spend 22.98% of their income on homeownership costs
5. Kansas City, MO
Kansas City remains the fifth most affordable housing market. The median list price sits at $249,900 and households can now expect to spend $1,499.10 monthly on mortgage payments and property taxes.
Housing Markets to Watch
The following housing markets witnessed significant changes this month:
Greensboro, NC
Greensboro became more affordable for prospective buyers this month, dropping to the 69th spot in our ranking. Households with a median income of $64,251 can expect to spend $1,649.30 monthly on mortgage payments and property taxes. Greensboro’s new Housing and Strategy Development Director, Samuel Hunter, began his role this month, looking to increase accessibility to affordable housing.
Tampa, FL
Tampa homebuyers can expect to spend less money this month on housing and take advantage of the current buyer’s market. Lower demand and higher inventory caused the city to move four spots in the rankings to become the 28th least affordable housing market, while the median list price sits at $461,250.
Tucson, AZ
Tucson rose seven spots to the 21st least affordable market, with a median list price of $625,000 and households spending 43.48% of income on housing, as limited new construction and rising resale prices push buyers to compete for fewer homes despite lower new-home prices and short-term incentives.
Methodology
The RealtyHop Housing Affordability Index analyzes proprietary and ACS Census data to provide an index of housing affordability and homeownership burden across the 100 most populous cities in the country. Median home prices are calculated using over 800,000 listings in the RealtyHop database over the month before publication.
To calculate the index, the following statistics are used:
1) Projected median household income based on Census ACS and BEA data
2) Median for-sale home listing prices via RealtyHop data
3) Local property taxes via ACS Census data
4) Mortgage expenses, assuming a 30-year mortgage, a 6.49% mortgage interest rate based on reported weekly averages in the past four weeks, and a 20% down payment.
See below for previous RealtyHop Housing Affordability Studies:
