In this February 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?
Given mortgage costs and high home prices, homeowners across the country need to plan strategically to afford the cost of homeownership. While some experts don’t expect interest rates or housing costs to drastically change this year, cities that continue to be affordable could create opportunities for buyers who spent last year saving to afford a down payment on a home.
- 56% of cities became more affordable this month, indicating decreasing housing prices and potential good news for homebuyers.
- Homeowners in 67 major cities still need to spend over 30% of their annual income to own a home.
- In areas where population and housing costs increased during the pandemic, housing prices are now starting to decrease.
The 5 Least Affordable Housing Markets
1. Miami, FL
Miami continues to hold the title for the least affordable housing market in the country. The city became slightly more affordable this month; but a family earning the median city income will still need to spend a staggering 84.31% of their earnings on homeownership costs.
2. Los Angeles, CA
Los Angeles comes in second on our unaffordable list. Housing became more expensive in the past month, with the median home price increasing to $965,000. A household earning an average income of $71,466 must allocate 82.37% of its annual paycheck toward owning a home.
3. Newark, NJ
Newark emained in third place again this month. The city is a special case, as it has seen home prices drastically increase due to its proximity to New York City, despite median incomes being far lower than the NYC average. While asking prices in Newark did decrease this month, households will still need to spend over 74% of their paychecks in order to pay for the mortgage and tax payments associated with owning a home.
4. New York, NY
New York City remains in fourth place this month, with median home prices decreasing from $860,000 to $840,000. A household making an average $70,118 per year would need to spend almost 73% of its income in order to own an average home, equating to a payment of $4,252 per month.
5. Hialeah, FL
Hialeah remains fifth on our least affordable ranking this month, but became slightly more affordable in the period. A household making an average income of $41,500 would need to spend 64.73% of its pay in order to buy a home in the city.
The 5 Most Affordable Housing Markets
1. Fort Wayne, IN
Fort Wayne residents can take satisfaction in the city’s new title as the most affordable housing market nationwide. The median home price decreased to $155,000 this month, meaning households earning a standard income only have to spend 16.94% of their paychecks on owning a home. This is the first time Fort Wayne has been the most affordable housing market since August 2022.
2. Wichita, KS
Wichita dropped to second place on our affordable list this month. The cost of homeownership increased slightly in the city, where a household must now direct 17.09% of its income toward mortgage payments and property taxes.
3. Detroit, MI
Detroit remains the third most affordable U.S. housing market. Households who earn a median salary of $35,528 will only need to spend 17.67% of their income on ownership payments, or about $1,250 monthly.
4. Lubbock, TX
Lubbock moved back to the fourth most affordable U.S. housing market after spending two months in fifth place. The median asking price for a home decreased to $175,000. Households making the median income only need to spend 21.14% of their earnings on monthly housing payments.
5. Cleveland, OH
Cleveland dropped back to fifth place this February, where the median home price slightly increased by $450 to $109,900. Households earning a median income of $36,229 now only need to spend 21.39% of their paycheck annually to own a property.
Notable Change this Month
Austin saw asking prices for homes continue to slide this month. The current median of $480,000 means that households generating an income of $85,184 in the city must allocate 39.81% of it toward ownership costs.
Austin and other “Zoomtowns” (those that witnessed accelerated growth in light of the pandemic and work-from-home policies) are growing more affordable as buyer demand has waned and some employees were forced to return to the office.
Asking home prices decreased across other Zoomtowns this month, such as Boise, Fremont, and Raleigh.
Norfolk homebuyers will need to spend more money on housing if they choose to buy this month; the city jumped up six spots to become the 58th least affordable market. In this city, residents should expect to spend 31.67% of their annual income to own a home.
Buffalo decreased five spots this month to 80th place. In this city, homes currently ask a median of $162,900, meaning households with an average income must allocate 27.07% of it towards mortgage and property tax payments.
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:
- RealtyHop Housing Affordability Index: January 2022
- RealtyHop Housing Affordability Index: December 2022
- RealtyHop Housing Affordability Index: November 2022
Scroll to the right to view the full data set