In this July 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?
With mortgage rates teetering around 7.0% this month, prospective buyers and recent homebuyers still face unaffordable markets that tighten their budgets. Current renters must carefully decide whether to rent or buy and consider their local market’s affordability. As median list prices increased across 56 of the 100 surveyed cities this month, buyers still grapple with low inventory and high housing costs.
Key Findings
- Homebuyers in 90 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. Two of the five least affordable housing markets are in California, and seven of the ten least affordable markets are in California.
- Four of the five least affordable housing markets became less affordable this month – Los Angeles, CA; Miami, FL; Irvine, CA; and Newark, NJ.
- This month, housing costs increased in all five of the most affordable housing markets: Toledo, OH; Detroit, MI; Fort Wayne, IN; Wichita, KS; and Buffalo, NY.
The 5 Least Affordable Housing Markets
1. Los Angeles, CA
Los Angeles remains the country’s least affordable housing market. The median list price slightly increased to $1,099,000. Families making the city’s median income will spend $6,426.44 monthly on mortgage payments and property taxes.
2. Miami, FL
Miami is still the second least affordable housing market. The median list price for a home increased to $719,000, and the average family must direct 92.44% of their monthly income toward homeownership costs.
3. Irvine, CA
Irvine is the third most cost-burdened housing market. Families with a median household income of $127,647 can expect to spend $9,016.09 monthly on housing costs like their mortgage payments and property taxes.
4. New York, NY
New York City held its spot as the fourth least affordable housing market. The median list price decreased to $856,500, and households can expect to spend 75.80% of their income monthly on homeownership costs.
5. Newark, NJ
Newark jumped three spots in the rankings to become the fifth least affordable housing market this month. With a median list price of $400,000, homeowners can expect to spend 68.82% of their monthly income on housing costs.
The 5 Most Affordable Housing Markets
1. Toledo, OH
Toledo is yet again the most affordable housing market. The median list price increased to $109,900, and households can expect to spend 18.86% of their income on mortgage payments and property taxes.
2. Detroit, MI
Detroit also maintained its spot as the country’s second-most affordable housing market. Households generating the median income can expect to spend $645.58 monthly on homeownership costs.
3. Fort Wayne, IN
Fort Wayne jumped one spot to become the third most affordable housing market this month. The median list price remained at $220,000; buyers can expect to spend 26.34% of their income on housing costs.
4. Wichita, KS
Wichita dropped one spot to the fourth most affordable housing market. Homeowners with an average income of $63,032 will spend $1,414.71 monthly on mortgage and tax payments.
5. Buffalo, NY
Buffalo jumped one spot to make its way onto the Most Affordable Housing Markets list this month. With a median list price of $179,999, households can expect to spend 26.93% of their income monthly on the costs associated with homeownership.
Housing Markets to Watch
The following housing markets witnessed significant changes this month.
Greensboro, NC
Greensboro jumped seven spots in the rankings to become the 50th least affordable housing market. The median list price increased to $309,500, and homeowners can now expect to direct 40.07% of their monthly income toward housing costs.
Portland, OR
Portland dropped six spots in the rankings and became more affordable for prospective buyers this month. The median list price dropped 1.04% to $475,000, and households can expect to spend $2,936.12 monthly on homeownership costs.
Chicago, IL
Chicago moved up six spots to the 53rd least affordable housing market. Households with a median income of $74,412 can expect to direct 40.47% of it toward mortgage payments and property taxes.
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 6.99% mortgage interest rate based on reported weekly averages in May, and a 20% down payment.
