In this March edition of the RealtyHop 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?
As 2024 progresses, prospective buyers still face low inventory and high list prices. With already high interest rates increasing yet again, affordability worsens across the nation. Based on the mortgage rates reported in February 2024, we arrived at an average 30-year fixed mortgage rate of 6.81%, compared to 6.64% in the previous month. This means that for a family to afford a $600,000 home, they’d have to put in an additional $650 each year.
Key Findings
- Homebuyers in 81 out of the 100 major cities we analyzed would have to spend over 30% of their annual income on homeownership; that’s one more than last month.
- In the 25 most unaffordable housing markets nationwide, homeowners spend at least 46% or more of their income on homeownership costs.
- California remains unaffordable for average Americans. Three of the five least affordable cities are in the state.
- Four of the top five least affordable housing markets became more expensive this month – Los Angeles, CA, Miami, FL, New York City, NY, and Long Beach, CA.
- Housing costs became less affordable in four of the more affordable housing markets this month – Toledo, OH, Fort Wayne, IN, Wichita, KS, and Cleveland, OH.
A note about this report: beginning in 2024, we adjusted our methodology to better reflect the current state of the housing market. Please see the Methodology section below for more information.
The 5 Least Affordable Housing Markets
1. Los Angeles, CA
Los Angeles remained the country’s least affordable housing market this month. With a median list price of $1,100,000, prospective buyers can expect to spend a significant 98.11% of their income on the cost of owning a home.
2. Miami, FL
Miami also maintained its spot in the rankings this month. The median list price for a home remained at $735,000, and the average family needs to spend $4,409.47 monthly on mortgage payments and property taxes.
3. Irvine, CA
Irvine has the third most cost-burdened housing market. The median list price for a home in this city decreased to $1,384,000, and homeowners can now expect to spend 78.80% of their income on homeownership costs.
4. New York, NY
New York City continues to host the fourth least affordable housing market. Prospective buyers with a median income of $77,338 can expect to spend 71.24% of it on mortgage payments and property taxes monthly.
5. Long Beach, CA
Long Beach remains the fifth on our list of least affordable housing markets. Families should expect to spend 68.09% of their income on a home with a median list price of $785,000.
The 5 Most Affordable Housing Markets
1. Detroit, MI
Detroit is still the most affordable housing market nationwide. The median purchase price for a home decreased to $87,450, where the average family spends $561.96 monthly on mortgage and tax payments.
2. Toledo, OH
Toledo has the country’s second-most affordable housing market. This month, buyers with a median household income of $46,089 can expect to direct 18.5% of it toward their monthly homeownership costs.
3. Fort Wayne, IN
Fort Wayne increased one spot to become the third most affordable housing market. Buyers looking at a house with a median list price of $199,900 can expect to spend $1,187.03 on their mortgage and tax payments each month.
4. Wichita, KS
Wichita became the fourth most affordable housing market this month. Households with a median income of $61,627 will spend 24.10% on their monthly housing costs.
5. Cleveland, OH
Cleveland remained the country’s fifth most affordable housing market. The median list price increased to $125,000, and households can spend a reasonable 25.96% of their income on homeownership.
Housing Markets to Watch
The following housing markets witnessed significant changes this month.
Bakersfield, CA
Bakersfield increased seven spots in the rankings this month to become the 49th least affordable housing market. The median home price is $395,990, 0.65% higher than the prior month. Homeowners can expect to spend 38.55% of their income on housing costs each month.
Plano
Plano became more affordable for homeowners this month, decreasing five spots to the 52nd spot in our rankings. Households with a median income of $107,271 can expect to spend $3,419.38 monthly on homeownership. While housing affordability is 0.93% worse than last month in Plano, the city is still more affordable than Dallas, where homebuyers would have to set 47.37% of their annual income aside for ownership costs
Baltimore, MD
Homebuyers in Baltimore can find a less expensive market this month, dropping to the 90th least affordable slot. The median purchase price for a home decreased to $180,000, and households can expect to spend 27.41% of their income on property taxes and mortgage payments.
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 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, 6.81% mortgage interest rate based on reported weekly averages in January, and 20% down payment.
March 2024 Methodology Update
Instead of assuming a fixed mortgage rate, starting with this month’s report, the RealtyHop Affordability Index calculates the monthly payments using the 30-Year Fixed Rate Mortgage Average reported by Freddie Mac. In the past, our calculation for median prices included all closed and active residential listings created within a month prior to the publication of each report. Moving forward in 2024, the median price is only calculated based on list prices. This change will better reflect the conditions prospective buyers face in a given market.
