Least Affordable Housing Markets in the US

The housing market appears to be cooling off somewhat. But that doesn’t mean houses are becoming more affordable everywhere.

According to RealtyHop’s home affordability index, many cities in the US are still hard to afford. Of the 100 cities in the index, the average American should spend at least 40% of their income on owning a home in 42 of them.

The index takes into account median household income, median sales prices using RealtyHop listings, local property taxes using American Community Survey (ACS) Census data, and mortgage costs. Projected mortgage payments assume a 30-year mortgage, 5.5% interest and 20% down payment.

Here are the 12 least affordable housing markets in the US, as well as median household income, median home price, and the percentage of income needed to own a home in each place.

1. Miami

  • Average household income: $44,581
  • Median house price: $610,000
  • Share of income: 87.39%

2. Los Angeles

  • Average household income: $69,695
  • Median house price: $975,000
  • Share of income: 85.34%

3. New York

  • Average household income: $68,129
  • Median house price: $925,000
  • Share of income: 82.47%

4. Newark, New Jersey

  • Average household income: $38,854
  • Median house price: $385,000
  • Share of income: 77.52%

5. Hialeah, Florida

  • Average household income: $40,036
  • Median house price: $465,000
  • Share of income: 72.55%

6. Long Beach, California

  • Average household income: $70,677
  • Median house price: $799,000
  • Share of income: 69.77%

7. San Francisco

  • Average household income: $126,117
  • Median house price: $1,388,000
  • Share of income: 66.56%

8. San Diego

  • Average household income: $89,357
  • Median house price: $950,000
  • Share of income: 65.65%

9. Anaheim, California

  • Average household income: $80,486
  • Median house price: $834,250
  • Share of income: 63.98%

10. Santa Ana, California

  • Average household income: $74,185
  • Median house price: $750,000
  • Share of income: 62.14%

11. Oakland, California

  • Average household income: $82,649
  • Median house price: $798,000
  • Share of income: 60.85%

12. Boston

  • Average household income: $79,797
  • Median house price: $775,000
  • Share of income: 59.38%

To be a homeowner, an average family living in Miami, Los Angeles, or New York would need to spend more than 80% of their annual income on housing. The remaining 20% ​​should be enough to cover all other costs, which is probably unsustainable.

Kevin O’Leary, judge at CNBC’s “Money Court,” advises potential homeowners to follow the ⅓ rule when buying. This means that only ⅓ of your after-tax income should go to your home. Anyone who earns the median income in any of the above places is way out of that rule.

Instead, “you might have to live in a smaller apartment if you rent, or buy a smaller house to start,” O’Leary previously told CNBC Make It.

O’Leary’s rule is similar to the U.S. government’s 1981 advice, which states that you should spend no more than 30% of your income on housing costs, including mortgage interest, property taxes, and maintenance.

Sign up now: Get smarter about your money and career with our weekly newsletter

Do not miss: Is the job market really getting worse? 3 recent job seekers weigh in

Add a Comment

Your email address will not be published.