For the average American family, is owning a house in the United States becoming increasingly out of reach? It all depends on where you live.
According to the latest data compiled by RealtyHop’s Housing Affordability Index, which examined housing expenditure needs for families in the largest 100 cities in the United States in May of this year, it was found that the national average mortgage interest rate is still above 6.5%, leading to increased home costs for potential buyers in May. Despite an increase in inventory, most buyers still face unaffordable costs, forcing them out of their respective markets. Among the 100 cities analyzed, 86 cities saw an upward trend in median home prices.
The study reported that in 88 cities, homebuyers need to allocate over 30% of their annual income towards purchasing a home, which increased by 7 cities compared to April. In the top 25 least affordable housing markets in the United States, homeowners are spending at least 49% of their income on housing-related expenses.
For ordinary Americans, housing costs in California remain unaffordable, with three out of the top 5 least affordable cities in the United States located in California.
In May, four out of the top 5 least affordable housing markets in the United States became even more expensive, while housing costs in the 5 more affordable markets increased as well.
The study pointed out that among the top 5 least affordable housing markets in the United States, three are in California, namely Los Angeles (ranked 1st), Irvine (ranked 3rd), and Long Beach (ranked 5th); with Miami and New York ranking 2nd and 4th respectively.
Data showed that Los Angeles has the least affordable housing market in the United States, with the median listing price of homes reaching $1.1 million. This means that a median income household in California needs to allocate 99.3% of their income towards housing expenses.
In Irvine, the median listing price for homes has risen to $1.475 million, with homeowners expected to devote 84.96% of their monthly income towards housing expenses.
In Long Beach, potential buyers with a median income of $81,509 are estimated to spend $4,770.59 per month on mortgage and property taxes.
Miami, ranking as the 2nd least affordable housing market in the United States, saw the median listing price for homes in May drop to $710,000, with households expected to spend $4,378.55 per month on mortgage payments and property taxes. New York City is the 4th most cost-burdened housing market. A moderate-income household is predicted to allocate 76.63% of their income to purchase a home with a median price of $850,000.
On the other hand, the top 5 most affordable housing markets in the United States are as follows: Toledo, Ohio, Detroit, Michigan, Fort Wayne, Indiana, Wichita, Kansas, and Buffalo, New York.
In these 5 cities, the percentage of monthly household income spent on property-related expenses ranges from 18.66% to 27.46%, much lower compared to the most burdened cities.
In May of this year, in Detroit, the second-largest economically suitable housing market in the United States, the median home price was $95,000; while in Fort Wayne, the third-largest economically suitable housing market, the median price was $215,000.
RealtyHop’s Housing Affordability Index utilizes proprietary data and ACS census data to provide housing affordability and homeowner burden indices for the top 100 populous cities in the United States. Median home prices are calculated based on over 800,000 listings in the RealtyHop database from the previous month.