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?
Prospective buyers still face unattractive market conditions like low inventory and interest rates. However, home prices in some cities have come down this month, creating opportunities for those who held off in previous seasons. Buyers who are flexible may consider relocating to save on mortgage payments and property taxes.
Key Findings
- Homeowners in 66 major cities must spend over 30% of their annual income on homeownership; that’s two less than last month.
- In the 25 most unaffordable housing markets nationwide, homeowners still allocate 40% or more of their income toward homeownership costs.
- The median list price increased this month in two of the least affordable housing markets – Miami and Hialeah.
- Housing costs decreased or remained unchanged in the five most affordable housing markets.
The 5 Least Affordable Housing Markets
1. Miami, FL
Miami remains the least affordable housing market this September. The median list price for a home increased to $615,000, and homeowners can expect to spend $3,304 monthly on mortgage and property tax payments. The city continues to grapple with low inventory, and current homeowners with lower-value homes are renovating to increase their potential sales price.
2. Los Angeles, CA
Los Angeles continues to be the second most cost-burdened housing market. The median asking price of $929,000 did not shift this month, and families can still expect to spend 77.29% of their annual income on homeownership costs.
3. Newark, NJ
Newark remains the third most unaffordable housing market nationwide. The median purchase price for a home slightly increased this month, meaning residents with a household income of $41,045 must spend 74.14% of that on their mortgage and property taxes.
The city’s proposed zoning changes face mixed opinions from residents concerned about environmental impacts and historic neighborhoods. The zoning changes aim to create more housing.
4. Hialeah, FL
Hialeah increased one spot in the rankings this month to become the country’s fourth least affordable housing market. Home prices continue to rise in Hialeah as people who are priced out of Miami shift their focus to the more affordable cities nearby. Buyers with a median income of $43,219 can expect to spend 67.52% on housing costs.
5. New York, NY
New York City became the fifth least affordable housing market in the country. Housing prices decreased to a median of $780,000, and buyers can now expect to spend $3,980 monthly.
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 decreased to $78,850, meaning that the average family would need to spend just $467 monthly on homeownership costs.
2. Wichita, KS
Wichita is the second most affordable housing market nationwide. Housing costs did not shift this month, meaning homeowners with a median income of $63,360 can still expect to direct only 19.70% toward owning a home.
3. St. Louis, MO
St. Louis offers the third most affordable housing market for the second month in a row. Home prices slightly decreased to $175,000, and a household with an average income only needs to spend $945 monthly on mortgage payments and property taxes. The Community Development Administration recently awarded $20 million to develop additional housing opportunities across the city.
4. Cleveland, OH
Cleveland remains the fourth most affordable market this September. An average family making $37,306 would only need to spend 22.09% of their income on mortgage and tax costs to own a home.
5. Kansas City, MO
Kansas City broke into our five most affordable cities this month. With a median home asking price of $230,000, homeowners only need to spend 23.31% of their income on housing costs.
Housing Markets to Watch
The following housing markets witnessed significant changes this month.
Paradise, NV
Paradise jumped seven spots this month, becoming the 48th least affordable housing market. The median home price increased to $349,900, with homeowners needing to spend 34.56% of their income on housing.
Atlanta, GA
Atlanta dropped nine spots in the rankings and became more affordable for homebuyers this August. Homeowners with a median household income of $72,225 should expect to spend $2,176.26 monthly toward mortgage payments and property taxes.
Cincinnati, OH
Cincinnati became less affordable for homebuyers this month. The median purchase price increased to $229,900, and homeowners now spend 33.31% of their income on housing costs; that’s 4.98% more than last month.
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: August 2023
- RealtyHop Housing Affordability Index: July 2023
- RealtyHop Housing Affordability Index: June 2023
