In this June 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 the Fed maintaining interest rates at all-time highs since 2007, many cities have reported fewer transactions compared to prior months. However, the effect of the rate hikes has been more muted than the economists have anticipated, meaning home prices, despite cooling, remain unaffordable for many families in America.
Key Findings
- Homeowners in 69 major cities must spend over 30% of their annual income on homeownership; that’s three cities more than last month – Albuquerque, NM, Henderson, NV, and Lexington, KY.
- In the 25 most unaffordable housing markets nationwide, homeowners direct over 40% of their income toward homeownership.
- The median purchase price increased this month in four of the least affordable housing markets – Miami, FL, Newark, NJ, New York City, NY, and Hialeah, FL.
- The two most affordable housing markets, Detroit, MI, and Wichita, KS, became more affordable this month.
The 5 Least Affordable Housing Markets
1. Miami, FL
Miami is the least affordable housing market this June. The median list price for a home increased to $590,000, and homeowners can expect to spend $3,170 monthly on mortgage and property tax payments. That’s 80.6% of a local family’s annual income.
2. Los Angeles, CA
Los Angeles remains the second most unaffordable housing market in the nation. Prospective buyers earning a median household income of $73,432 should expect to spend 77.09% of their monthly income on the cost of homeownership.
Homes are still expensive for Los Angeles buyers, but the median purchase price for a home is down $40,000 from June 2022. The market is more approachable for buyers now compared to last year, when 76% of homes sold above their listing price.
3. Newark, NJ
Newark ranks as the third least affordable housing market in June, where the median listing price of a home increased to $395,000. Newark residents should expect to reserve 74.29% of their annual income for homeownership costs.
4. New York, NY
New York City has the fourth least affordable housing market in the country. The median purchase price for a home increased to $839,000 this month. Prospective buyers need to spend $4,281 monthly, or 71.8% of their annual household income, to own a home.
5. Hialeah, FL
Hialeah remained the fifth most unaffordable housing market this month. The average family spends 65.79% of their annual household income on mortgage payments and property taxes, up 2.33% from last month.
Homeowners in Hialeah continue to grapple with high housing costs that outpace their income. While 27.4% of homeowners nationwide fall into the “house poor” category, 60% of Hialeah residents currently live beyond their means.
The 5 Most Affordable Housing Markets
1. Detroit, MI
Detroit remains the most affordable housing market this month. The median purchase price for a home slightly decreased to $80,000. A family with a median household income of $35,893 will only spend 15.85% of their annual income, or $474 monthly, on mortgage payments and property taxes.
2. Wichita, KS
Wichita is the second most affordable housing market nationwide. This month, the city became even more affordable, where homeowners direct 19.13% of their income toward housing costs, 1.62% less than in May.
Low housing costs may be compelling more buyers to enter the housing market. While homes stay on the market for a median of 36 days nationwide, houses in Wichita only take seven days to sell. In this city, buyers can find properties they can afford, despite high-interest rates.
3. Cleveland, OH
The Cleveland housing market again ranks as the third most affordable nationwide. Potential households purchasing a home for a median of $112,000 should expect to reserve 21.88% for homeownership costs.
While homeownership remains affordable compared to other areas of the country, prospective homebuyers in Cleveland still face a competitive housing market. Properties sometimes sell before buyers can tour, and those who do get to submit an offer end up paying more than the asking price.
4. St. Louis, MO
St. Louis moved up one spot and became the fourth affordable housing market in June. Homes became more expensive, with the median asking price increasing to $184,900. A family looking to own St. Louis should set aside 22.86% of their annual income for mortgage payments and property taxes.
5. Fort Wayne, IN
Fort Wayne became the country’s fifth most affordable city. Homeowners with a median household income of $59,960 will have to direct 22.87% toward owning a home.
Housing Markets to Watch in June
The following housing markets witnessed significant changes this month.
Sacramento, CA
Sacramento only moved one spot in the rankings this month, dropping down to the 25th most unaffordable market. However, homeownership became 3.56% more affordable for owners, who now only need to spend 39.27% of their income on housing costs thanks to higher relative earnings.
However, despite a slight adjustment in the median asking price, Sacramento remains a competitive market, as scarce inventory and buyer demand continue to drive up home prices. The city’s real estate is picking up this summer, and the volume of sales transactions slightly increased in May this month.
Orlando, FL
Orlando made the list of markets to watch last month, jumping seven spots as the median list price reached $376,250. The city became less affordable for buyers in June, increasing six spots to the 29th most unaffordable market. In April, the city was only the 42nd least affordable market. Buyers must spend 38.98% of their income on homeownership
As Orlando grows less affordable for potential buyers, younger generations fall behind in buying homes. Baby Boomers currently outpace Millennials in homeownership in Orlando, purchasing their retirement homes at a faster rate than residents can acquire their first property.
Portland, OR
Prospective buyers in Portland witnessed the most significant change in the rankings this June, dropping eight spots to become the 37th least affordable housing market. The median purchase price dropped to $499,900, 1.79% lower than in the previous month. Homebuyers will now have to spend 38.43% of their income on property taxes and mortgage payments.
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 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.
Methodology Update
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: May 2023
- RealtyHop Housing Affordability Index: April 2023
- RealtyHop Housing Affordability Index: March 2023
