Housing has become increasingly unaffordable in the United States. In this May edition of RealtyHop’s Housing Affordability Index, we examined the share of homeownership cost to income to find out:
Is homeownership affordable or possible for the average American family?
This month, 90 cities experienced month-over-month appreciations. Hialeah, FL, became less affordable, and so did Miami and New York. This indicates that housing in major U.S. cities is increasingly unaffordable, although the recent and upcoming rate hikes could finally cool down the housing market later in 2022.
The 5 Least Affordable Housing Markets
1. Miami, FL
For the fourth month in a row, Miami is the least affordable housing market in the entire nation. The median list price reached $625,000 this month, driven by strong demand from investors and homebuyers alike. Based on the projected median household income of $44,095, an average Miami family would have to set aside 82.21% of their annual income for homeownership costs. This number is 0.97% higher than in April.
2. New York, NY
New York City remains the second least affordable city in the U.S. The median asking price hit $998,000, up 1.64% from the previous report. A family making a median income of $67,354 in the city needs to allocate 81.31% of their annual income on mortgage payments and property taxes.
3. Newark, NJ
Newark rose one spot and became the third least affordable housing market in the nation. Homes are very unaffordable for Newark families. A local household making a projected median income of $38,460Â will need to contribute 77.14% of their annual income toward homeownership costs, 1.99% higher than in April.
4. Los Angeles, CA
While housing remains unaffordable in Los Angeles, the city dropped one spot to the fourth least affordable housing market in the U.S. With a median asking price of $950,000 and a projected median household income of $68,767, an average L.A. should set aside 76.17% of their annual income for monthly mortgage payments and property taxes, up 0.64% from the previous month.
5. Hialeah, FL
Hialeah became significantly less affordable this May. The city rose 3 spots in our affordability rankings and is now the fifth least affordable U.S. housing market. The median asking price for residential homes rose to $420,000. With a projected median household income of $39,600, a typical Hialeah family will need to spend 60.03% of their annual income on mortgage repayments and property taxes.
The 5 Most Affordable Housing Markets
1. Wichita, KS
Wichita remains the most affordable housing market in May. Real estate values rose slightly to a median asking price of $155,000. With a projected median household income of $59,239, an average Wichita family will need to allocate 16.14% of their annual income toward homeownership, up 0.68% from the previous month.
2. Fort Wayne, IN
Fort Wayne once again ranks the second most affordable city in the U.S. The median home value currently sits at $159,900. A typical Fort Wayne household can expect to set aside 16.32% of their annual income toward homeownership after factoring in monthly mortgage payments and property taxes.
3. Detroit, MI
Detroit continues to be the third most affordable city in the country, despite an increase in real estate values. The median asking price reached $86,250 this month, and for a typical family in Detroit, that means 17% of their annual income should be allocated toward mortgage payments and property taxes, which comes out to around $489 per month.
4. Lubbock, TX
Lubbock remains the fourth most affordable U.S. housing market, despite a major increase in real estate values. The median asking price rose to $165,000, up from $159,900 compared to a month ago. An average household looking to secure a home in Lubbock has to contribute 19.28% of their annual income toward homeownership costs.Â
5. Cleveland, OH
Cleveland once again is the fifth least affordable city in the U.S. With a median list price of $109,500 and a projected median household income of $34,861, a typical Cleveland family would have to spend 20.30% of their annual income on homeownership costs. This number is 0.36% lower than in April.
Notable Changes this May
Paradise, NV
Housing affordability worsened in Paradise this month. The city rose seven spots in our affordability rankings and is now the 28th least affordable U.S. housing market. With a projected median income of $55,704 and a median asking price of $394,900, a typical Paradise household can expert to put 38.84% of their annual income toward homeownership costs, up 5.31% from the previous month.
St. Petersburg, FL
St. Petersburg became less affordable this May. The city ranks the 44th least affordable city in the nation, up six spots from the previous month. The median list price currently sits at $385,000. With a projected median household income of $64,346, families looking to own in St. Petersburg would have to set aside 34.44% of their annual income for housing costs, or $1,847 per month.
Philadelphia, PA
Housing in Philadelphia became less affordable this May. The city now ranks 48th on our affordability rankings, rising six spots from the previous month. With a median list price of $285,000 and a projected median household income of $49,868, a typical family looking to own in Philadelphia can expect to spend 33.33% of their annual income on homeownership costs.
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
Methodology Update
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 out 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: April 2022
- RealtyHop Housing Affordability Index: March 2022
- RealtyHop Housing Affordability Index: February 2022
