Anyone who has lived in (or visited) some of the United States’ largest metro areas can attest to a certain common experience: they are expensive. Cities like New York, Los Angeles, and San Francisco continually top the lists as some of the most expensive places to live or play. In fact, the most recent release of 1-bedroom median rent prices from Zumper puts San Fran, NYC, and Boston in the lead. But when it comes to housing affordability, the results look a little different. While many of the country’s biggest cities are the most expensive, they don’t all necessarily qualify as the most unaffordable. Instead, for those looking to buy a home or investment property, here’s a look at the 10 most unaffordable areas in the country right now.
A Look at Nationwide Medians
Calculating affordability can be challenging given the massive differences in the cost of living, housing, income, transportation, healthcare, and food across cities, states, and counties. New Jersey and Rhode Island, for example, tied for first as the most expensive states to live in in 2019. Yet, neither state makes the list when we look at housing affordability.
Instead, when it comes to buying a home, what makes a housing market out of reach isn’t always the average costs for the region, but rather the percentage of a buyer’s annual income that is needed to purchase a median-priced home.
Right now, the median home price in the United States sits at an estimated $274,000. The median household income for the nation reached $63,179 according to the latest numbers from the Federal Reserve Bank of St. Louis.
Across the country, however, those numbers vary dramatically. In Hawaii, for instance, the median home price is sitting around $673,000. In San Francisco, it is $927,400. Many of the cities with the highest median home values, however, also experience some of the highest median household incomes.
What Makes an Area Unaffordable?
We’ve already determined that affordability and expensiveness can differ, but how do we determine what is considered unaffordable? At the end of 2019, ATTOM Data Solutions tracked and ranked housing affordability in 100 metro areas based on data from 855 counties. The results were shocking.
The data revealed that in 71% of counties, the median home price is still unaffordable for the average working adult. In fact, two-thirds of the housing markets would require at least 30% of wages in order to buy a home. When referring to renters, spending 30% of income (or more) on rent would qualify the household as rent-burdened. In this case, these are the most unaffordable, or mortgage-burdened areas in the U.S.
With a median home value of $355,000, Stockton, CA has seen some huge growth in recent years. In fact, the home value has increased by 155% since the housing market was at its lowest in recent years. What puts Stockton into the category of unaffordable housing, however, is the median household income of $45,347, well below the national average. With an unemployment rate of 6.8% (compared to the national 3.9%) it is easy to see how buying a home in Stockton could be out of reach for many people.
When discussing the cost of living and affordability, Hawaii often makes the list, along with other hard-to-reach locations such as Alaska. The cost to ship and fly in food, materials, and almost every living necessity adds to the cost of a living burden that many Hawaiian residents experience. In Honolulu, this is no different. The median housing price is $580,000, lower than the state median. But compared to other parts of the islands, the percentage of a household income needed to buy a home in Honolulu means purchasing is unaffordable for many residents.
San Jose, CA
It should come as no surprise that the majority of the most unaffordable metro areas in the U.S. today are in California. In fact, looking beyond metro areas and examining the most unaffordable counties in the country, California still makes up half the list. In many California locales, this has to do with the fact that home appreciation increased faster than wages. This is evident in San Jose where the median home price is $1,086,000, while the median household income is only $83,400. Not only that but San Jose has the largest share of million-dollar homes than anywhere else in the country.
San Francisco, CA
Median home prices are constantly changing, but current data indicates that median-priced homes in San Francisco cost somewhere between $875,000 and $927,000. Either way, this puts San Fran into the category of one of the most unaffordable metro areas. According to HSH mortgage data, this means the average working household would need to make nearly $188,000 in annual income in order to afford a home in San Francisco.
San Diego, CA
There are many reasons people love living in San Diego, including the nearness of beach, mountains, cultural activities, and dining. As attractive as the city is, purchasing a home is still unaffordable for many. The median household income of $79,646 is well above the national income, but with housing prices around $568,000, buying a home requires much more than the average income.
Riverside-San Bernardino, CA
Located east of the Los Angeles metro area, Riverside-San Bernardino is yet another California area deemed unaffordable when it comes to buying a home. This reason this LA suburb makes the list? The discrepancy between the median house value of $355,000 and the median household income that, at just below $39,000, comes in well under the national median income.
According to the study by ATTOM, the median home price in Provo is around $340,000, up 105% from the lowest point in the market. This rapid growth in home prices, as well as an increase in population, means there aren’t enough affordable homes available for the number of people in Utah’s third-largest city.
Oxnard is another area that is impacted by the unreachable housing prices of Southern California. With median home prices resting at $598,000, and median income near $62,000, homes are unaffordable for many, making renting a popular choice in Oxnard.
New York, NY
Whether we’re discussing the most expensive cities in the world or the most unaffordable housing market, New York City is bound to make the list. While median home prices have declined over the last year, a New Yorker still needs a household income of well over $100,000 annually in order to safely afford a home.
Los Angeles, CA
Los Angeles has enjoyed a 4.4% increase in median home prices over the past year and a huge leap of 99% from the bottom of the market. The city, however, hasn’t enjoyed the same increase in the average salary or household income. With median prices currently around $650,000, buying a home is still unaffordable for the average wage earner in LA.
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