RealtyHop Housing Affordability Index: February 2020

Posted January 29th, 2020

In this February installment of the RealtyHop Housing Affordability Index, we investigate the decision to purchase a home in the 100 most populous cities across America. Is homeownership affordable or even possible for the average family in each city? Every month we analyze proprietary RealtyHop data alongside comprehensive U.S. Census data to find out. See how your city fares in affordability.

 

The 5 Least Affordable Housing Markets

 

1. Los Angeles, CA remained atop our list as the least affordable city for homeowners this month. The average LA household should expect to pay $4,109 per month, or 90.48% of annual income, toward homeownership costs. On a brighter note, while still the most expensive, LA’s homeownership index dropped off highs seen in the past few months.

2. New York, NY jumped one spot to second place on our list, displacing Miami. It’s no secret that the New York housing market is unaffordable, but just how expensive is it? The average household in the city would need to spend 87.7% of total annual income for a mortgage and taxes, more than double the national average of 36%.

3. Miami, FL was the third most expensive housing market in the country this February. The city saw home prices remain stable at a median of $500,000. Given median household income of $33,999, a household in Miami should expect to spend 86.1% of total annual income to cover the mortgage and local tax costs associated with homeownership.

4. San Francisco, CA saw a slight decrease in home prices to $1.398 million, leading in turn to a 3.38% drop in its affordability index. The average household in San Francisco proper would have to spend $6,377 per month in order to own a home, equating to 79.5% of already strong household incomes.

5. Jersey City, NJ placed fifth on our list for the third month in a row. The city’s index climbed 2.87% in the month due to a hike in real estate prices. The average family in Jersey City would need to allocate 68.5% of annual income in order to own a home in the area.

 

The 5 Most Affordable Housing Markets

 

1. Detroit, MI continued its reign as the most affordable market in the United States this February. Given household incomes of $27,838, and median home prices of $52,500, a family in the Motor City would only need to spend 13.69% of annual income on homeownership costs. However, the city did see a 5% increase in its homeownership burden due to a hike in home asking prices over the past month.

2. Wichita, KS wwas the second most affordable market for homeowners this February, seeing an additional 3.85% decrease in homeownership burden. Given median home prices of $125,000, coupled with a strong household income just shy of $50,000, Wichita was a solid choice for those looking to purchase a home.

3. Fort Wayne, IN was third on our affordable list for the second straight month. An average household in the city would only need to spend $603 per month, or 15.8% of annual household income, in order to own a home in the city.

4. Cleveland, OH saw a 3.62% drop in homeownership burden this February, as median home prices slid to $79,900. A family in Cleveland would only need to spend $433 per month on the costs of owning a home, equating to 18.69% of annual income.

5. Kansas City, MO was the fifth most affordable housing market in the country this month, as home prices remained stable at a median of $175,000. Given strong household incomes of $50,136, a family in Kansas City would only need to spend 21.5% of total income on mortgage and tax costs.

 

Notable Changes This February

 

  • Newark, NJ increased two spots to take 6th place on our list, driven by a hike in home prices to $309,900. Given median household income, a family in Newark would need to spend $1,884 per month on housing costs, equating to 64.94% of annual household income.
  • Houston, TX dropped five spots to 35th place, as the city saw its affordability index decrease 3.39%. A household in Houston would need to allocate 37.01% of annual income toward the costs associated with owning a home.
  • Orlando, FL increased six spots to 37th place on our list. The city became less affordable as home prices jumped to a median of $274,900, further leading to a 5.73% increase in its affordability index.
  • Raleigh, NC saw its index increase 5.56% due to a hike in home prices to $322,900. The city now ranks 54th place on our list, a jump of eight spots compared to last month.

 

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) Median household income from the U.S. Census

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, 4.5% interest rate, and 20% down payment.

 

See below for the previous RealtyHop Housing Affordability Indexes:

Full Dataset