In this June 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?
Mortgage rates fell below 7.0%, yet prospective buyers still face unaffordable markets that leave them questioning whether to rent or buy. As housing costs climbed in 62 of the 100 cities this month, would-be buyers found themselves with fewer housing options. In more competitive markets, low inventory still presents a significant barrier to homeownership.
Key Findings
- Homebuyers in 89 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 48% of their income on homeownership costs.
- California remains unaffordable for average Americans. Three of the five least affordable cities are in the state. Seven of the ten least affordable housing markets also reside in California.
- Only one city of the five least affordable housing markets became less affordable this month – New York City, NY.
- This month, housing costs became more affordable in four of the most affordable housing markets: Toledo, OH, Detroit, MI, Wichita, KS, and Cleveland, OH.
The 5 Least Affordable Housing Markets
1. Los Angeles, CA
Los Angeles remains the country’s least affordable housing market. The median list price decreased slightly to $1,095,000. Families making the median income in the city will spend 97.41% monthly on mortgage payments and property taxes.
2. Miami, FL
Miami also maintained its spot as the second least affordable housing market. The median list price for a home increased to $715,000, and the average family will spend $4,359.32 monthly on homeownership costs.
3. Irvine, CA
Irvine held its spot in the rankings as the third least affordable market. Families with a median household income of $127,253 can expect to spend 84.01% of their monthly income on housing costs.
4. New York, NY
New York City is the fourth most cost-burdened housing market. The median list price climbed to $874,900, and households will direct 77.70% of their income toward homeownership.
5. Long Beach, CA
Long Beach rounds out our list of the least affordable housing markets. A family with an average income can expect to spend 69.12% of it on a home with a median list price of $799,000.
The 5 Most Affordable Housing Markets
1. Toledo, OH
Toledo remains the most affordable housing market nationwide this month. The median list price decreased to $104,999, and households can expect to spend 18.08% of their income on housing costs.
2. Detroit, MI
Detroit maintained its spot as the country’s second-most affordable housing market. The median list price of $95,000 did not change this month, and buyers can still spend $619.75 monthly on their mortgage and property taxes.
3. Wichita, KS
Wichita jumped one spot to become the third most affordable housing market. Homeowners with an average income of $62,838 will spend $1,382.29 monthly on mortgage and tax payments.
4. Fort Wayne, IN
Fort Wayne became the fourth most affordable housing market this month. The median list price increased to $220,000, and buyers can expect to spend 26.44% of their income on housing costs.
5. Cleveland, OH
Cleveland earned a spot on our list this month as the country’s fifth most affordable housing market. Households can expect to spend 27.91% of their monthly income on a home with a median list price of $135,000.
Housing Markets to Watch
The following housing markets witnessed significant changes this month.
Madison, WI
Madison jumped seven spots in the rankings to become the 35th least affordable housing market. The median list price increased to $414,700, and homeowners will now expect to direct 44.04% of their monthly income toward housing costs. As the city becomes more popular for prospective buyers, housing costs continue to increase amidst scarce supply.
Cincinnati, OH
Cincinnati dropped six spots in the rankings to become more affordable for prospective buyers this month. Households with a median income of $50,913 can expect to direct $1,632.40 monthly toward mortgage payments and property taxes.
Pittsburgh, PA
Pittsburgh moved up five spots to the 81st least affordable housing market. Households with a median income can now expect to spend 31.71% of it on housing costs; that’s 3.52% more than last month.
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 800,000 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, a 6.995% mortgage interest rate based on reported weekly averages in May, and a 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.
