Exploring Home Affordability: Just Two Major U.S. Cities Make the Cut
In the realm of housing affordability, a recent report by Clever Real Estate sheds light on a stark reality: only two of the 50 largest metropolitan areas in the United States provide a median salary sufficient for buyers to comfortably purchase the typical home. These cities are Detroit and Pittsburgh.
The research conducted by Clever focused on analyzing the housing costs in relation to household income, using the 28% rule as a standard measure of affordability. This benchmark suggests that housing costs should not exceed 28% of a household's gross income to be considered affordable. According to the findings, the median-priced home in the U.S. is currently valued at $438,000, necessitating a household income of approximately $123,226 when accounting for standard mortgage rates, insurance, and property taxes. In stark contrast, the national median household income stands at just $77,719, resulting in a significant affordability gap of $45,507.
In Detroit, the situation is remarkably different. Despite a median household income of $72,574, the average home price is just $195,000, which is less than half of the national average. This translates to residents having more than $12,100 more than necessary to purchase the typical home. Similarly, Pittsburgh offers an appealing housing market for those on a median income of $72,532, where the median home price is $250,000.
While these two cities are highlighted as affordable options, seven other metropolitan areas remain within reach, albeit they fall just short in terms of median income necessary to buy a typical home. The list includes: Philadelphia, which is short by $864; Cleveland, falling short by $1,564; Cincinnati with a deficit of $2,492; St. Louis, which lags by $4,071; Indianapolis at $6,259 short; Louisville missing by $10,634; and Buffalo, lacking $12,452.
Interestingly, Iowa stands out as the only state where median salaries align perfectly with housing prices. With a median income of $71,433 and average home prices around $239,000, Iowans can comfortably afford to buy homes without financial strain. The Midwest, particularly states like Indiana, Ohio, West Virginia, and Missouri, is noted for having a higher number of affordable housing markets.
However, not all areas are so fortunate. In stark comparison, several cities in the West are listed among the least affordable, with California leading the pack. The top five most unaffordable cities include San Jose, San Francisco, Los Angeles, San Diego, and New York City. Others like Seattle, Miami, Boston, Riverside, and Denver also make the list, highlighting the growing disparity between income levels and housing costs in these regions.
The Clever report points to a troubling trend in the American housing market, where affordability seems to be a luxury reserved for only a select few. As housing prices continue to escalate, the gap between what residents can earn and what they must pay for shelter widens, raising concerns about the long-term sustainability of urban living. Understanding these dynamics is essential for both potential homebuyers and policymakers aiming to remedy the widening affordability gap that plagues numerous cities across the nation.
The research conducted by Clever focused on analyzing the housing costs in relation to household income, using the 28% rule as a standard measure of affordability. This benchmark suggests that housing costs should not exceed 28% of a household's gross income to be considered affordable. According to the findings, the median-priced home in the U.S. is currently valued at $438,000, necessitating a household income of approximately $123,226 when accounting for standard mortgage rates, insurance, and property taxes. In stark contrast, the national median household income stands at just $77,719, resulting in a significant affordability gap of $45,507.
In Detroit, the situation is remarkably different. Despite a median household income of $72,574, the average home price is just $195,000, which is less than half of the national average. This translates to residents having more than $12,100 more than necessary to purchase the typical home. Similarly, Pittsburgh offers an appealing housing market for those on a median income of $72,532, where the median home price is $250,000.
While these two cities are highlighted as affordable options, seven other metropolitan areas remain within reach, albeit they fall just short in terms of median income necessary to buy a typical home. The list includes: Philadelphia, which is short by $864; Cleveland, falling short by $1,564; Cincinnati with a deficit of $2,492; St. Louis, which lags by $4,071; Indianapolis at $6,259 short; Louisville missing by $10,634; and Buffalo, lacking $12,452.
Interestingly, Iowa stands out as the only state where median salaries align perfectly with housing prices. With a median income of $71,433 and average home prices around $239,000, Iowans can comfortably afford to buy homes without financial strain. The Midwest, particularly states like Indiana, Ohio, West Virginia, and Missouri, is noted for having a higher number of affordable housing markets.
However, not all areas are so fortunate. In stark comparison, several cities in the West are listed among the least affordable, with California leading the pack. The top five most unaffordable cities include San Jose, San Francisco, Los Angeles, San Diego, and New York City. Others like Seattle, Miami, Boston, Riverside, and Denver also make the list, highlighting the growing disparity between income levels and housing costs in these regions.
The Clever report points to a troubling trend in the American housing market, where affordability seems to be a luxury reserved for only a select few. As housing prices continue to escalate, the gap between what residents can earn and what they must pay for shelter widens, raising concerns about the long-term sustainability of urban living. Understanding these dynamics is essential for both potential homebuyers and policymakers aiming to remedy the widening affordability gap that plagues numerous cities across the nation.
Topics Consumer Products & Retail）
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