In this August installment of RealtyHop’s Housing Affordability Index, we examined the share of income U.S. households would have to spend on homeownership costs to find out:
Is homeownership affordable or possible for the average American family?
Despite certain housing markets showing signs of cooling off, many major U.S. cities remain unaffordable. Based on a 30-year fixed-rate interest rate of 5.5%, median list price, and projected household income, 79 of the 100 most populous cities in the U.S. have a homeownership burden of 28% or higher, compared to 83 in July. In other words, average families in 79 of the top U.S. cities will have to spend 28% or more of their annual income on housing.
The 5 Least Affordable Housing Markets
1. Miami, FL
Miami continues to be the least affordable U.S. city this August, with a median home price of $610,000, 1.67% higher than the previous month. Based on the projected median household income of $44,581 and a 5.5% interest rate on a 30-year fixed rate mortgage, an average Miami family would have to set aside 87.39% of their annual income to afford a home.
2. Los Angeles, CA
Los Angeles remains the second least affordable city in the nation this month. The median list price rose slightly to $975,000 from $969,000. With a 5.5% mortgage interest rate, an average L.A. family will need to spend 85.34% of their annual income on homeownership costs.
3. New York, NY
New York City stays as third least affordable U.S. this July. The median asking price dropped to $925,000 in the past month. This is the second month where median home prices decreased month-over-month in New York City. With a projected median income of $68,129, families in New York should expect to allocate 82.47% of their annual income toward mortgage repayments and real estate taxes.
4. Newark, NJ
Newark remains the fourth least affordable housing market in the nation. The median list price for residential homes is currently $385,000. A local Newark family making a projected median income of $38,854 would have to set aside 77.52% of their annual income for mortgage payments and taxes. The homeownership burden is 1.34% higher than in July.
5. Hialeah, FL
Hialeah rounded out the top 5 least affordable housing markets this month. The median home price rose to $465,000 this August, up 3.56% from July. With a projected median household income of $40,036 and an interest rate of 5.5% on a 30-year fixed-rate mortgage, a local Hialeah family will need to spend 72.55% of their annual income on homeownership costs.
The 5 Most Affordable Housing Markets
1. Fort Wayne, IN
Fort Wayne continues to rank as the most affordable U.S. housing market. The median home value rose slightly to $160,000 from $155,000 this month. With a 5.5% 30-year fixed-rate mortgage, an average Fort Wayne family can expect to spend 17.74% of their annual income toward homeownership.
2. Wichita, KS
Wichita remains the second most affordable U.S. city. The median real estate value currently sits at $159,000. After factoring in the local real estate taxes and a 5.5% 30-year fixed-rate mortgage, a typical household in Wichita can expect to spend $894.82 per month on homeownership costs. This translates to 17.94% of their annual income.
3. Detroit, MI
Detroit is the third most affordable U.S. housing market. The median asking price remains stable at $89,999 this month. For average Detroit families looking to finance their home purchase, they should allocate 19.03% of their annual income on mortgage payments and property taxes. The homeownership burden remains unchanged from the previous month.
4. Lubbock, TX
Lubbock improved one spot in our affordability rankings and became the fourth most affordable market, replacing Cleveland. The city’s real estate values remain relatively stable, with a median list price of $170,000. A Lubbock family looking to buy soon should expect to contribute 21.37% of their annual income toward homeownership.
5. Cleveland, OH
Cleveland dropped one spot as the fifth most affordable U.S. city. Median home value rose from $110,000 to $112,500 this August. Given a 5.5% mortgage interest rate, families in Cleveland should be prepared to spend 22.46% of their annual income on homeownership costs. The homeownership burden is 2.27% higher than in July.
Notable Change this August
Orlando became less affordable this month. The city rose five spots and now ranks the 41st least affordable U.S. housing market. Residential homes in the city are currently priced at a median of $365,000. This means an average Orlando family looking to buy will need to contribute 40.14% of their annual income toward owning costs, up 2.82% from a month ago.
St. Petersburg, FL
Homes in St. Petersburg became slightly more affordable this August. The city currently ranks the 48th least affordable market in the U.S., down 5 spots from July. The median list price slid to $390,000. Based on a 30-year-fixed mortgage rate of 5.5%, a typical household looking to buy in St. Petersburg should allocate 38.02% of their annual income to owning a home, down 4.88% from July.
Housing affordability slightly improved this month in Honolulu. The median home price dropped from $570,000 in July to $540,000 this August. A typical family looking to own in Honolulu will need to set aside 39.6% of their annual income to cover homeownership costs. This number is 5.26% lower than in July.
Garland is now the 37th most affordable housing market in the U.S., improving 6 spots from its July ranking. The median asking price dropped from $342,000 in July to $329,900 this month. Coupled with a 5.5% mortgage rate and local real estate tax rate, average households in Garland should expect to spend $1,988.78 per month on homeownership costs. This equals 34.10% of their annual income.
Cincinnati became less affordable this August. The city currently ranks the 32nd most affordable housing market in the U.S., down 5 spots from the previous month. Based on a 5.5% mortgage rate and a median list price of $209,900, prospective homebuyers can expect to spend $1,245.82 on mortgage repayments and property taxes. This translates to a homeownership burden of 32.2% for an average household in Cincinnati, 2.44% higher than in July.
The RealtyHop Housing Affordability Index analyzes both 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.
See below for previous RealtyHop Housing Affordability Studies:
- RealtyHop Housing Affordability Index: July 2022
- RealtyHop Housing Affordability Index: June 2022
- RealtyHop Housing Affordability Index: May 2022