Owning a home is one of the key pillars of the American dream. However, for many families, the picturesque lifestyle of picket fences and backyard barbecues remains just a dream due to rising mortgage rates, high housing prices, and limited inventory.
Half of potential homebuyers express their inability to afford the down payment and closing costs, with varying levels of affordability across different cities in the United States.
To reveal the housing affordability in America, Creditnews Research ranked the 50 most populous cities based on the percentage of communities where a typical married couple household can afford to buy a home.
Using the median income of married households to determine the percentage of unaffordable communities, Creditnews compared income data with the typical home values in each community. If the monthly mortgage payment exceeds 25% of the household income, the area is deemed unaffordable.
According to Creditnews Research, apart from three cities, the housing affordability in all other cities continues to decline. However, there is still hope for families looking to establish roots in affordable cities other than Los Angeles, New York, Boston, San Jose, and Miami.
Among the top 50 ranked cities, in at least 12 cities, more than 50% of communities are unattainable for the average married couple. Since the outbreak of the pandemic, the affordability gap has significantly widened, with no major city reporting an improvement in affordability post-pandemic.
In the top 10 most expensive cities, four are located in California, including Los Angeles and San Jose, which are 100% unaffordable for typical married couple households. Los Angeles ranks first with the highest percentage of unaffordable communities.
Senior analyst Sam Bourgi from Creditnews Research told CNBC Make It, “The cost of housing in Los Angeles has always been very high, but what we’re seeing now is that average home prices and overall housing costs far exceed the growth in average income.”
He added that the pandemic has worsened the affordability in the entertainment capital.
“We’re seeing more and more residents in Los Angeles and surrounding areas spending a greater portion of their income on housing,” he added.
According to a 2022 report from the US Census Bureau, the median household income in Los Angeles is $83,411. A 2023 Redfin report states that to afford the average monthly mortgage payment of $5,932, an annual salary of $237,281 is needed, surpassing the median household income by over $150,000.
Among the top 10 most unaffordable cities in the US, four are in California, with New York City ranking seventh, and all communities in the top four major cities being unaffordable for the average married couple.
Missouri’s St. Louis is unexpectedly listed as the second most unaffordable housing market.
Creditnews Research findings show that in 2024, 100% of communities in St. Louis are unaffordable for the average married couple household.
Bourgi stated, “What we’re seeing is people holding onto their homes, which has led to very low supply of homes for sale, impacting affordability.”
According to Zillow data, the average home price in St. Louis is $174,341, with a 6.1% increase over the past year.
St. Louis boasts economic diversity, housing seven Fortune 500 companies and over a dozen Fortune 1000 companies.
The Greater St. Louis area is also home to major research universities and offers family-friendly attractions like the St. Louis Zoo and the scenic 1,300-acre Forest Park.
Even before the COVID-19 pandemic, housing in St. Louis was unaffordable for residents. In 2019, 98% of communities in the city were deemed unaffordable — worse than Los Angeles, Boston, or San Jose.
The study spanned across cities with Los Angeles in California, St. Louis in Missouri, Boston in Massachusetts, San Jose in California, San Diego in California, San Francisco in California, New York City in New York, Miami in Florida, Nashville in Tennessee, and Richmond in Virginia.
The research doesn’t entirely signal bad news, as cities in the Midwest, Rust Belt, and parts of the South still offer affordable buying options. In Cleveland, Ohio, and Memphis, Tennessee, 0% of communities are unaffordable for the average married couple.
“There are affordable housing markets there,” Bourgi stated. “But you have to ask yourself if you’re willing to relocate because these places are typically not seen as attractive.”
Since the pre-pandemic period, the cities witnessing the largest increase in unaffordable communities are San Jose (70%), San Diego (57.8%), and Riverside-San Bernardino (51.9%); only three cities have seen no change in housing affordability: Cleveland, Memphis, and Hartford, Connecticut, which were also the only three cities with a 0% unaffordable community rate pre-pandemic.