With interest rates on the rise, more families in the U.S. find themselves struggling with homeownership. In this June 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, 81 cities experienced month-over-month appreciations. While Miami and New York both became slightly more affordable, cities like Atlanta, GA, Irving, TX, and Durham, NC became less affordable.
The 5 Least Affordable Housing Markets
1. Miami, FL
Miami once again ranks the least affordable U.S. city, even though the median asking price slid slightly to $620,000. Based on the projected median household income of $44,095, an average Miami family would have to set aside 81.55% of their annual income in order to afford a home.
2. New York, NY
New York City continues to be the second least affordable housing market in the nation. The median asking price dropped to $975,000, down from $998,000 in the previous month. A family making a median income of $67,354 in New York should expect to allocate 79.44% of their annual income toward homeownership costs.
3. Los Angeles, CA
Los Angeles rose one spot and ranks the third least affordable city in the country this June. With a median asking price of $965,000, households making the median income in L.A. would need to spend 77.37% of their annual income on monthly mortgage payments and property taxes. This number is up 1.58% from the previous month.
4. Newark, NJ
Newark dropped one spot this month on our affordability rankings as the fourth least affordable city. The median list price for residential homes decreased to $390,000 this month. A typical household making a projected median income of $38,460 should set aside 73.38% of their annual income to cover monthly mortgage payments and real estate taxes.
5. Hialeah, FL
Hialeah remains the fifth least affordable housing market this June. Home prices continued to rise in the city, reaching $430,000, up 2.38% month-over-month. With a projected median household income of $39,600, a local Hialeah family will need to spend 61.46% of their annual income on homeownership costs.
The 5 Most Affordable Housing Markets
1. Fort Wayne, IN
This June, Fort Wayne ranks the most affordable U.S. housing market. The median home value remains stable at $159,900. An average Fort Wayne family can expect to spend 16.32% of their annual income toward homeownership.
2. Wichita, KS
Affordability worsened slightly in Wichita this month, making it the second most affordable city in June. The median asking price rose slightly to $157,500. With a projected median household income of $59,239, an average Wichita family will need to allocate 16.4% of their annual income toward homeownership, up 1.61% from the previous month.
3. Detroit, MI
Detroit continues to be the third most affordable city in the country, but homes in the city have become increasingly expensive. The median asking price reached $90,000 this month. A Detroit family making median household income would need to spend 17.73% of their annual income on mortgage payments and property taxes, up 4.35% month-over-month.
4. Cleveland, OH
Cleveland improved one spot on our affordability rankings and became the fourth most affordable housing market in the nation. With a median list price of $109,900, families in Cleveland should budget 20.38% of their annual income for homeownership costs. This number is 0.37% higher than in May.
5. Lubbock, TX
Lubbock rounded out our index this month as the fifth most affordable city to own a home, despite increasing real estate values. The median asking price rose to $175,000, up from $165,000 in May. A typical Lubbock household can expect to contribute 20.45% of their annual income toward homeownership costs.
Notable Changes this June
Housing affordability worsened in Irving this month, as real estate values rose from $365,000 to $390,000. The city currently ranks the 43rd least affordable U.S. housing market. With a projected median income of $73,324, families in Irving would need to allocate 36.16% of their annual income toward homeownership costs, up 6.85% from the previous month.
Atlanta became less affordable this June. The city ranks the 37th least affordable city in the nation. The median asking price hit $429,000, up from $409,900 in May. With a projected median household income of $67,409, a typical Atlanta family would have to set aside 37.67% of their annual income for housing costs. The share of income is 4.66% higher than in May.
Homes in Durham have become increasingly expensive in recent months. The city now ranks the 32nd least affordable housing market in the U.S., rising five spots from the previous month. With a median list price of $438,990, an average Durham family looking to own would be required to spend 390.1% of their annual income on homeownership costs.
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
Our affordability index methodology was adjusted in January 2022. Due to the COVID-19 pandemic and data collection issues experienced by the 2020 ACS, no income data has been released since 2019. To ensure that our affordability index properly reflects the incomes of American households, we projected median household incomes based on income growth statistics released by the Bureau of Economic Analysis. This provides a realistic estimate of what Americans are currently making per household.
See below for previous RealtyHop Housing Affordability Studies:
- RealtyHop Housing Affordability Index: May 2022
- RealtyHop Housing Affordability Index: April 2022
- RealtyHop Housing Affordability Index: March 2022