RealtyHop Housing Affordability Index: September 2020

Posted August 31st, 2020

In this September 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 housing market in America this September. Home prices rose over the past month from a median of $917,500 to $927,500, leading to a 1.09% increase in the city’s index. Given household income, as well as local taxes, the average family in LA would need to spend 94.30% of annual income on housing costs if they decided to own.
 

2. Miami, FL

Miami, FL  was the second most expensive housing market this month, despite a slight drop in its index. A resident household in the city would need to allocate $2,537 per month toward mortgage and tax costs in order to own a home, equating to 89.54% of annual household income.

 

3. New York, NY

New York, NY  real estate dipped slightly in the past month, down to a median $889,000 from $895,000 last month. This decrease led to a 0.67% decrease in the city’s homeownership index. Given household income of $57,782, a New York family wanting to buy would need to spend $4,057 per month, or 84.27% of income, on homeownership costs.

 

4. San Francisco, CA

San Francisco, CA  remained the fourth most expensive market for homeowners, despite a decrease in prices over the month from $1.475M to $1.45M. Given median household income of $96,265, a family in the city would need to spend 82.39% of total annual income on mortgage and tax costs.

 

5. Oakland, CA

Oakland, CA  home prices rose over the past month to $778,000, leading to a 2.5% increase in the city’s homeownership index. The average Oakland family looking to buy should expect to allocate over 70% of annual income on the mortgage and tax costs associated with homeownership.

 

 

The 5 Most Affordable Housing Markets

 

1. Detroit, MI

Detroit, MI  was the most affordable market for homeowners this September, as the city’s already favorable index improved 4.35% due to a drop in home asking prices. A family in Detroit needs to only spend $332.66 per month on homeownership costs, equating to 14.34% of annual household income.

 

2. Fort Wayne, IN

Fort Wayne, IN  moved up one spot this month to become the second most affordable market in the country, displacing Wichita. Fort Wayne remained stable compared with last month; a family in the city would need to only allocate 18.96% of income toward homeownership costs.

 

3. Witchita, KS

Witchita, KS ‘s affordability index jumped 2.69% over the past month to 19.23%. Despite this, Wichita still remains a top affordable option for those looking to own a home. The median home price this September was $152,500, up from $148,500 last month.

 

4. Bakersfield, CA

Bakersfield, CA  became more expensive this September, as median home prices increased to $231,225 from $224,000. This rise led to a 3.23% hike in the city’s affordability index. Given household income of $60,058, as well as mortgage and local tax rates, a family in Bakersfield should expect to allocate a reasonable 22.99% of annual income toward housing costs.

 

5. Cleveland, OH

Cleveland, OH  saw a considerable increase in its affordability index this month, jumping 7.61% to 23.16%. Median real estate prices in the city increased to $99,000 from $92,000 last month, leading this charge. Though more expensive, Cleveland only dropped one spot on our most affordable list since last month.

 
 

Notable Changes This September

 

Laredo, TX

Laredo, TX dropped eleven spots to 62nd place. This was led by a decrease in median home prices from $200,000 to $185,000 this month. Laredo remains a solid choice for families looking to purchase a home, as the average household would only need to spend about 31% of income on mortgage and taxes.

 

Louisville, KY

Louisville, KY increased seven spots to 86th place, as the city became less affordable. Median home prices increased in the month, leading to a 7.31% hike in Louisville’s index to 25.69%. This compared with 23.94% last month.
 

Baltimore, MD

Baltimore, MD placed 83rd on our list this month (the 18th most affordable market). While the city still remains a great option for homebuyers, housing prices did increase over the past month, up to $189,900 from $180,000. Baltimore’s affordability index this September was 26%.

 


 

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