RealtyHop Housing Affordability Index: July 2022

With rising interest rates, more and more U.S. families struggle to enter homeownership. In this July 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?

This month, we updated the mortgage interest rate for payment calculation from 4.5% to 5.5% to reflect the housing market’s current state. Despite certain housing markets showing signs of cooling off, homes in major U.S. cities are still generally unaffordable. Of the 100 most populous cities, 83 have a homeownership burden of 28% or higher. In other words, average families in these cities will have to spend 28% or more of their annual income on owning costs.

According to our index, six of the 10 least affordable housing markets are in California, including Los Angeles (#2), San Diego (#6), Long Beach (#7), San Francisco (#8), Anaheim (#9), and Oakland (#10).

The 10 Least Affordable Housing Markets

1. Miami, FL

Miami remains the least affordable city in the U.S. this July, even though the median asking price slid slightly to $600,000. This is the second month where median home prices decreased month-over-month in Miami, indicating signs of cooling off. Despite the decrease, the city remains the battleground of affordable homeownership. Based on the projected median household income of $44,581, an average Miami family would have to set aside 85.96% of their annual income to afford a home.

2. Los Angeles, CA

Los Angeles outpaced New York and became the second least affordable city in the country this month. With a median asking price of $969,000 and 5.5% mortgage interest rate, an average L.A. family making the median income would have to spend 84.81% of their annual income on monthly mortgage payments and property taxes.

3. New York, NY

New York City slid one spot and became the third least affordable U.S. this July. The median asking price dropped to $949,000 in the past 30 days, and with a projected median income of $68,129, families in New York should expect to allocate 84.61% of their annual income toward homeownership costs.

4. Newark, NJ

Newark remains the fourth least affordable housing market in the nation. The median list price for residential homes dropped slightly to $379,900 this month. A typical Newark family making a projected median income of $38,854 should set aside 76.49% of their annual income for mortgage payments and property taxes.

5. Hialeah, FL

Hialeah remains the fifth least affordable housing market. The median asking price hit $449,000 this 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 70.06% of their annual income in order to afford a home.

6. Long Beach, CA

Long Beach continues to be one of the least affordable markets in the nation. In July, the city ranks the sixth least affordable market, rising three spots from the previous month. With a projected household income of $70,677, a family in Long Beach would need to allocate 68.11% of their annual income toward homeownership costs.

7. San Diego, CA

San Diego is the seventh least affordable U.S. city. With a median asking price of $957,000, an average family in San Diego should expect to spend $4,924.24 per month on mortgage and property taxes. This translates to 66.13% of their annual household income.

8. San Francisco, CA

San Francisco ranks the eighth least affordable U.S. city this month. The city is the most expensive market in the nation, with the median list price currently at $1,350,000. However, the high median household income makes homes more affordable in San Fransisco than in other major cities such as Miami and New York. With a projected household income of $126,117, a family in San Francisco should set aside 64.74% of their annual income for mortgage payments and real estate taxes.

9. Anaheim, CA

Anaheim dropped three spots this July and became the ninth least affordable housing market in the U.S. The median asking price currently sits at $839,990, and for an average family looking to own in Anaheim, that means they will need to spend 64.42% of their annual income on owning costs, including mortgage repayments and property taxes.

10. Oakland, CA

Oakland rose one spot as the tenth least affordable city in the nation. The median list price for homes for sale in the city dropped 2.4% to $799,000 this month. Despite the lower price tags, with higher interest rates, Oakland families looking to buy on average would need to spend $4,196.56 per month on homeownership costs, or 60.93% of their annual income.

The 10 Most Affordable Housing Markets

1. Fort Wayne, IN

Fort Wayne remains the most affordable U.S. housing market. The median home value dropped slightly to $155,000 from $159,900 in June. With a 5.5% 30-year fixed-rate mortgage, an average Fort Wayne family can expect to spend 17.19% of their annual income toward homeownership.

2. Wichita, KS

Wichita is the second most affordable city in the U.S., the same as the previous month. The median asking price rose slightly to $160,000. With a projected median household income of $59,861, an average Wichita family will need to set aside 18.05% of their annual income toward homeownership.

3. Detroit, MI

Detroit continues to be the third most affordable city in the country. The median asking price remains at $90,000 this month. A typical Detroit family would need to spend $553.86 per month, or 19.03% of their annual income on mortgage payments and property taxes.

4. Cleveland, OH

This July, Cleveland remains the fourth most affordable housing market in the nation. With a median list price of $110,000 and 5.5% mortgage interest rate, families in Cleveland should budget 21.97% of their annual income for homeownership costs.

5. Lubbock, TX

Lubbock is the fifth most affordable city to own a home. The city’s real estate values remain stable, with the median list price currently sitting at $175,000. A Lubbock family looking to buy soon should expect to contribute 22% of their annual income toward owning costs.

6. Anchorage, AK

Anchorage ranks the sixth most affordable housing market. The median list price for residential homes rose slightly from $310,000 to $315,000 this July, but homes are still generally affordable for Anchorage residents. An average family making median wages in Anchorage will need to spend 22.92% of their annual income on homeownership.

7. St. Louis, MO

St. Louis continues to be one of the most affordable cities in the U.S. This month, the city ranks the seventh most affordable housing market, with a median asking price of $190,000. With an interest rate of 5.5% on a 30-year fixed-rate mortgage, families looking to buy a home in St. Louis should expect to spend $1,023.87 monthly on mortgage payments and property taxes. This accounts for 24.50% of their annual household income.

8. Louisville, KY

Louisville is the eighth most affordable city in the nation. The median list price rose 2.07% to $247,000 this July. With a projected household income of $62,499, an average family looking to own in Louisville will have to set aside 25.11% of their annual household income for homeownership costs.

9. Virginia Beach, VA

Virginia Beach ranks the ninth most affordable housing market in the U.S. this month. Home values have remained consistent in the past two months, with the median list price currently at $344,999. A family making a median income of $85,545 should allocate 25.33% of their annual income toward mortgage payments and real estate taxes.

10. Omaha, NE

Omaha rounded out our index’s 10 most affordable housing markets this month. The median asking price rose 4% month-over-month to $260,000. With a mortgage interest rate of 5.5%, families in Omaha can expect to spend $1,569.14 per month on mortgage payments and property taxes. This translates to 26.38% of their annual income.

Methodology

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: