RealtyHop Housing Affordability Index: May 2020

Posted April 29th, 2020

In this May 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

Los Angeles, CA  was the least affordable market yet again this May, as the city’s homeownership burden increased 1.1% in the month to 93.03%. This means that given local tax rates, a standard mortgage, and median household income in Los Angeles, an average family would need to allocate 93.03% of annual income toward homeownership costs. At this rate, owning a home in LA is out of reach for the majority of families.

 

2. Miami, FL

Miami, FL  remained the second most cost-burdened homeownership market in America. Median household income of $33,999 was not enough to outweigh expensive home prices at $519,000. This led to a monthly mortgage/tax payment of $2,532, or 89.37% of an average household’s annual income.

 

3. New York, NY

New York, NY  remained the same in terms of affordability this month, experiencing a slight 0.1% drop in its index. Even with the current COVID-19 outbreak heavily impacting all real estate operations in New York, home prices remained stable over the month. The median asking price of all real estate is currently $899,000.

 

4. San Francisco, CA

San Francisco, CA  saw a small 0.51% drop in its homeownership index this month, due to a dip in asking prices to $1.45M. Given household income of $96,265, as well as local tax and mortgage rates, an average family in the city would need to spend $6,609 per month in order to own a home, which equates to 82.39% of normal household income.

 

5. Newark, NJ

Newark, NJ  increased one spot, displacing Jersey City, to round out the five least affordable housing markets in the country. Despite the leap, the city actually saw its affordability index decrease 2.31% due to a drop in home prices to $317,500.

 

 

The 5 Most Affordable Housing Markets

 

1. Detroit, MI

Detroit, MI  saw median home prices decrease this month to $50,000 from $52,000 last month. This led to the city’s index dropping 3.85% in this report. Given a median household income of $27,838, as well as local tax rates, an average family in Detroit would only need to spend $302 per month on a mortgage in order to own a home.

 

2. Wichita, KS

Wichita, KS  was the second most affordable city on our list, at an affordability index of 17.66%. The city did see a 3.7% increase in this index over the past month, as asking home prices jumped to $140,000. Wichita remains a strong choice for those families looking to purchase a home.

 

3. Fort Wayne, IN

Fort Wayne, IN  saw a 3.74% increase in its affordability index this month, as home prices jumped to $139,945. Given a standard mortgage, local taxes, and median annual incomes in Fort Wayne, an average family should expect to allocate $676, or 17.7% of total household income.

 

4. Cleveland, OH

Cleveland, OH  was again the fourth most affordable market in America this month. A number of factors contributed to Cleveland’s 18.71% affordability index. Reasonable home prices at a median of $79,999, coupled with an annual household income of $27,854, led to an average family only needing to spend $434 per month on the costs of owning a home.

 

5. Bakersfield, CA

Bakersfield, CA  entered the top five most affordable markets this month thanks to a drop in home asking prices. The median real estate listing in Bakersfield this month asked $217,999, compared to $224,999 at the beginning of April. The city’s affordability index was a reasonable 21.68%.

 
 

Notable Changes This May

 

New Orleans, LA

New Orleans, LA decreased eleven spots this month to 67th place. This drop was led by cheaper real estate as asking prices this month had a median of $199,000, compared with $215,000 last month. New Orleans continues to be a strong choice for families looking to purchase a home, with an index of 29.09%.

 

Memphis, TN

Memphis, TN saw its homeownership burden increase 5.62% in the month. With an annual household income of $38,230, a median home price of $169,000, and local taxes, a standard mortgage payment in Memphis is a reasonable $908 per month. This equates to 28.53% of total annual income for the average household in the city.

 


 

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.

 

 

Full Dataset