Conventional wisdom dictates households earning the nation’s median income would be able to afford median-priced homes. Unfortunately, there is a disparity between how far the median income can be stretched these days, and the cost of the American dream.
Home prices may have fallen 30% since 2006 and mortgages are at record low, but Americans are still struggling to afford buying a home. A recent Interest.com study showed that median-income households can only afford a median-priced home in 14 of 25 largest metropolitan areas.
“Despite all of the talk about how homes are more affordable than they have been in decades, buying a home is still a big challenge for many American households,” Mike Sante, managing editor of Interest.com, said in a press release. “Dealing with rising expenses and stagnant wages is a struggle. Even after years of declining home prices and record-low mortgage rates, median-income households are unable to afford a median-priced home in nearly half of the metropolitan areas that we looked at.”
The study compared the median home prices in 25 of the largest metropolitan areas —including property taxes, homeowner insurance costs, how much it would cost to make a 20% down payment and a 30-year fixed-rate mortgage — to the median household income for each city.
The survey showed the most and least affordable metropolitan areas, and the percentage of how much the median household income in a metropolitan area exceeds or falls short of the income required to purchase a median-priced home in that area.
Most Affordable Metropolitan Areas:
- 1. Detroit (+45.32%)
- 2. Atlanta (+40.00%)
- 3. Minneapolis (+32.20%)
- 4. Phoenix (+23.67%)
- 5. St. Louis (+23.49%)
Least Affordable Metropolitan Areas
- 21. Los Angeles (-12.52%)
- 22. Miami (-12.59%)
- 23. San Diego (-25.90%)
- 24. New York (-29.71%)
- 25. San Francisco (-32.76%)