In this January 2025 edition of the 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?
At the top of the new year, prospective homebuyers nationwide still struggle to afford the cost of a home in their area. In most cities, buyers will need to spend over 30% of their income on the cost of homeownership, tightening the budgets and forcing them to make difficult financial decisions. With mortgage interest rates still just below 7%, those looking to purchase a home this year will need to evaluate their options related to their local markets.
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 three less than last month.
- In the 25 most unaffordable housing markets nationwide, homeowners spend at least 46% of their income on homeownership costs.
- California remains unaffordable for average Americans. Six of the ten least affordable markets are in California.
- Three of the five least affordable housing markets — Los Angeles, CA, Miami, FL, and Newark, NJ — became less affordable this month.
- The median home price increased in two of the most affordable housing markets: Cleveland, OH, and Buffalo, NY.
The 5 Least Affordable Housing Markets
1. Los Angeles, CA
Los Angeles remains the country’s least affordable housing market. The median list price increased 1.5% this month, and households with a median income can now expect to spend a whopping 98.36% of their income on mortgage payments and property taxes. That’s nearly all of their yearly income of $81,010.
2. Irvine, CA
Irvine held onto its position as the second least affordable market this month. Housing became more affordable this month, with the median list price dropping to $1,680,000. Households with a median income can expect to spend $9,984.42 on homeownership costs.
3. Miami, FL
Miami is still the third least affordable housing market. With a median list price of $699,999, households will direct 86.77% of their monthly income toward mortgage payments and property taxes.
4. New York, NY
New York City remains the fourth least affordable housing market this month. The median list price decreased to $845,000, and families with a median income can now expect to spend $4,894.28 monthly on the cost of owning a home.
5. Newark, NJ
Newark returned to its spot as the fifth least affordable housing market after several months in the sixth position. Households in this city with a median income of $49,365 can expect to spend 66.53% on housing costs.
The 5 Most Affordable Housing Markets
1. Detroit, MI
Detroit is, yet again, the most affordable housing market. With a median list price of $99,000, households can expect to spend $638.29 monthly on housing. That’s 19.09% of their income.
2. Toledo, OH
Toledo held onto its spot as the second most affordable housing market. The median list price decreased slightly to $119,900, and families with a median household income of $48,243 will spend 19.89% of it on their monthly mortgage payments and property taxes.
3. Baltimore, MD
Baltimore moved three spots in the rankings this month to become the third most affordable housing market. Households can expect to spend $1,422.44 monthly on a home with a median list price of $221,000.
4. Cleveland, OH
Cleveland became the fourth most affordable housing market list this month. Households with a median income of $39,601 can expect to spend $918.99 monthly on their housing costs.
5. Buffalo, NY
Buffalo dropped to the fifth most affordable housing market. The median list price increased to $184,900, and households will now need to spend 27.86% of their income on mortgage payments and property taxes.
Housing Markets to Watch
The following housing markets witnessed significant changes this month.
Scottsdale, AZ
Scottsdale jumped six spots in the rankings to become the 23rd least affordable housing market this month. The median list price increased by 3.34% to $769,900, meaning households must allocate 46.77% of their income to housing.
Atlanta, GA
Atlanta is yet again a market to watch this month, as it dropped one spot to become the 73rd least affordable housing market. This city has the largest median listing price drop of 3.73%. Households with a median income of $82,509 can expect to spend $2,273.36 monthly on the cost of homeownership.
Irving, TX
Irving also became more expensive for buyers this month. The median list price jumped 2.5% to $410,000. Households can now expect to direct 40.17% of their monthly income to mortgage payments and property taxes.
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. The income growth rate is 0.3826%.
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 6.8525% mortgage interest rate based on reported weekly averages in the past four weeks, and a 20% down payment.
See below for previous RealtyHop Housing Affordability Studies:
- RealtyHop Housing Affordability Index: December 2024
- RealtyHop Housing Affordability Index: November 2024
- RealtyHop Housing Affordability Index: September 2024
