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?
Households across the country continue to face unaffordable housing markets with significant asking prices. Last week, however, the Fed finally offered a bit of relief, cutting the interest rate by half a point, easing the burden of homeownership for prospective families. Housing costs decreased in most markets this month thanks to lower interest rates, and those looking to purchase a home before the end of the year should act now to take advantage of lower monthly payments.
Key Findings
- Homebuyers in 82 out of the 100 major cities we analyzed would have to spend over 30% of their annual income on homeownership; that’s six less than last month.
- In the 25 most unaffordable housing markets nationwide, homeowners spend at least 45.06% of their income on homeownership costs.
- California remains unaffordable for average Americans. Seven of the ten least affordable markets are in California.
- Three of the five least affordable housing markets — Irvine, CA, Miami, FL, and Newark, NJ — became less affordable this month.
- Median home prices increased in four of the most affordable housing markets: Detroit, MI; Toledo, OH; Fort Wayne, IN; and Wichita, KS.
The 5 Least Affordable Housing Markets
1. Los Angeles, CA
Los Angeles remains the country’s least affordable housing market. The median list price did not change this month, and households can still expect to spend $5,893.44 monthly on their mortgage payments and property taxes.
2. Irvine, CA
Irvine jumped one spot in the rankings to become the second least affordable market this month. The median list price increased to $1,635,000, and homeowners with a median income must spend 86.22% of their earnings on homeownership costs.
3. Miami, FL
Miami became the third least affordable housing market this month. Families with a median household income of $57,385 will spend $4,010.30 monthly on the costs of homeownership.
4. New York, NY
New York City is still the fourth least affordable housing market. The median list price decreased yet again, and households can expect to spend 68.28% of their monthly earnings on mortgage payments and property taxes.
5. Newark, NJ
Newark also held its spot in the rankings this month. Families with a median household income of $48,600 must spend $2,718.38 monthly for a home at the median list price.
The 5 Most Affordable Housing Markets
1. Detroit, MI
Detroit regained its spot as the least affordable housing market this month. With a median list price of $99,900, households with a median income can expect to spend 18.68% of it on housing costs each month and month.
2. Toledo, OH
Toledo dropped one spot to become the second most affordable housing market. The median list price slightly increased to $119,900, and households can expect to spend $764.58 monthly on mortgage payments and property taxes.
3. Fort Wayne, IN
Fort Wayne remained the third most affordable housing market this month. Households with a median income of $60,916 will spend 25.67% of their monthly earnings on a house that costs $229,950.
4. Wichita, KS
Wichita also held onto its spot as the fourth most affordable housing market. The median list price increased slightly to $229,900, but families will still spend under the recommended 30% of their income on housing costs, spending only 25.73%.
5. Cleveland, OH
Cleveland made its way onto the most affordable housing markets list this month. With a median list price of $139,900, households with a median income can expect to spend $878.19/month on their mortgage payments and property taxes.
Housing Markets to Watch
The following housing markets witnessed significant changes this month.
Orlando, FL
Orlando jumped nine spots in the rankings this month to become the 47th least affordable housing market. The median list price increased by $10,000 to $385,000, and households must spend 38.19% of their income on housing costs each month.
Dallas, TX
Dallas may have only moved two spots in the rankings this month but witnessed a significant price change. The median list price decreased by 4.28% to $430,000. Families with a median can expect to spend $2,674.53 monthly on mortgage payments and property taxes.
Charlotte, NC
Charlotte also became more affordable for buyers this month, dropping six spots in the rankings. With a median list price of $419,000, homeowners can now expect to direct 36.52% of their monthly earnings toward property costs.
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 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, a 6.30% mortgage interest rate based on reported weekly averages in the past four weeks, and a 20% down payment.
