In this July 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?
With interest rates above 7% and high housing prices, many potential buyers are holding off purchasing properties. Low inventory still affects most markets nationwide, where those looking to buy property have fewer options and continue to face competition. All of these factors combined continue to make homeownership unaffordable for most would-be buyers.
- Homeowners in 68 major cities must spend over 30% of their annual income on homeownership; that’s one city less than last month.
- In the 25 most unaffordable housing markets nationwide, homeowners direct over 40% of their income toward homeownership costs.
- The median purchase price increased this month in four of the least affordable housing markets – Miami, Los Angeles, Newark, and Hialeah.
- Detroit is the only city of the five most affordable housing markets to become more affordable this month.
The 5 Least Affordable Housing Markets
1. Miami, FL
Miami is the least affordable housing market this July. Despite higher interest rates, real estate values in the city continue to climb. The median list price for a home increased to $599,000, where homeowners can expect to spend $3,218 monthly on mortgage and property tax payments.
2. Los Angeles, CA
Los Angeles remains the second most unaffordable housing market in the nation. The median purchase price for a home is now $930,000, and households should expect to spend 77.37% of their monthly income on the cost of homeownership.
3. Newark, NJ
Newark is the third least affordable city in July. Households generating a median income of $41,045 can expect to spend 72.28% of their annual income on mortgage payments and property taxes.
While home prices are still high in Newark, prospective homebuyers are purchasing homes at a higher rate than in other cities. Proximity to New York City remains a major driver for housing demand as commuters purchase homes in this area to avoid even higher costs in areas like Manhattan and Brooklyn.
4. New York, NY
New York City remains the fourth least affordable housing market in the country. The median purchase price for a home decreased slightly to $815,000 this month. Prospective buyers need to spend $4,158 monthly to own a home.
5. Hialeah, FL
Hialeah is still the fifth most unaffordable housing market. The average family in Hialeah spends 66.10% of their annual household income to afford a median-priced home worth $460,000.
The 5 Most Affordable Housing Markets
1. Detroit, MI
Detroit remains the most affordable housing market in July. The median purchase price for a home slightly decreased to $79,000, and an average family can expect to spend just 15.32% of their income on mortgage payments and property taxes.
2. Wichita, KS
Wichita is the second most affordable housing market nationwide. The city became even more affordable this month, where homeowners only need to spend 18.95% of their monthly income, or $1,000, on housing costs.
3. Cleveland, OH
The Cleveland housing market again ranks as the third most affordable nationwide. The median purchase price slightly increased to $114,500 this month.
Cleveland’s lower housing costs continue to appeal to younger first-time homebuyers, where the population of 27 to 42-year-olds increased by 6% over the past three years. Buyers are moving to the area and spending money where they can afford property, increasing sales in the city.
4. St. Louis, MO
St. Louis remained the fourth affordable housing market in July. Home prices slightly increased to $185,000, and a family generating a median income will spend 22.48% of it on mortgage payments and property taxes.
5. Fort Wayne, IN
Fort Wayne is the country’s fifth most affordable city. Homeowners with a median household income of $59,960 spend 23.09%, or $1,151 monthly, on homeownership.
Housing Markets to Watch
The following housing markets witnessed significant changes this month.
Laredo jumped eight spots in the rankings this month, becoming the 63rd least affordable housing market nationwide. The median purchase price increased to $249,900, and homeowners can expect to spend 31.27% of their income on housing; that’s 2.45% more than last month.
Glendale became more affordable for buyers this month and dropped seven spots in the rankings. Homeowners in the city will now only need to direct 36.05% of their income, or $2,019 monthly, toward homeownership costs.
Buyers with various budgets can find options in Glendale, as the city offers a robust luxury market and many options for those making the median income. In this city, homes sell in an average of 36 days, making it an appealing option for local buyers.
Atlanta also significantly changed in rankings this month, jumping seven spots to become the 37th least affordable market. The median purchase price for a home increased by $15,000 to $415,000. Buyers should expect to spend 37.51% of their income on mortgage payments and property taxes.
Higher interest rates and sales prices leave buyers with few options, with the city reporting a slowdown compared to last year. With lower transaction levels and limited inventory, those needing to purchase a home still enter bidding wars.
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 300,000 listings in the RealtyHop database over the month prior to publication.
To calculate the index, the following statistics are used:
1) Projected median household income
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, 5.5% interest rate, and 20% down payment.
To better reflect the current housing market for the general America homebuyers, we have updated our methodology to include only the following property types: single-family homes, module homes, condos, co-ops, and townhouses. You may therefore see discrepancies between prior reports based on this change.
See below for previous RealtyHop Housing Affordability Studies:
- RealtyHop Housing Affordability Index: June 2023
- RealtyHop Housing Affordability Index: May 2023
- RealtyHop Housing Affordability Index: April 2023