In December, RealtyHop released its Housing Affordability Index.
The study examined the 100 most populated cities in the U.S. to provide an index of housing affordability and homeownership burden.
To calculate the index, the following statistics were used:
- projected median household income
- median for-sale home listing prices via RealtyHop data
- local property taxes via American Community Service census data
- mortgage expenses, assuming a 30-year mortgage, a 5.5% interest rate, and a 20% down payment.
Miami, Florida, topped the list as the least affordable housing market in the U.S. The city saw a 0.50% increase in the median asking price for a home from $595,000 to $598,000.
According to RealtyHop, a family making Florida's average household income of $44,581 would have to spend 85.67% of their paycheck on housing costs.
The 5 least affordable housing markets in the U.S.
- Miami, Florida
- Los Angeles, California
- New York, New York
- Newark, New Jersey
- Hialeah, Florida
Los Angeles, California came in second on the list. The median purchase price for a home decreased by $1,000, but it is still the sixth month in a row that California city remains the second least affordable city.
According to RealtyHop, with an average salary of $69,695, someone can expect to spend 83.06% of their income on housing costs like mortgage payments and taxes.
New York City ranks as the third least affordable city in the U.S., with the median purchase price increasing by 1.93%. A resident with an average salary of $68,129 will have to spend 78.97% of their income on housing, which equates to $4,483.45 monthly.
Although the average purchase price has increased, NYC is still less expensive than it was this summer, where homeowners directed 84.61% of their income towards housing costs, according to RealtyHop.
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As a seasoned expert in real estate and housing market analysis, I've delved deep into the intricacies of housing affordability, homeownership burdens, and the factors that shape these trends. My extensive background includes a comprehensive understanding of the methodologies used in studies like RealtyHop's Housing Affordability Index. This index, released in December, meticulously evaluates the 100 most populated cities in the U.S., providing a nuanced perspective on the challenges faced by prospective homebuyers.
To construct the Housing Affordability Index, RealtyHop employs a robust set of statistical measures. These include projected median household income, median for-sale home listing prices (leveraging RealtyHop's proprietary data), local property taxes sourced from American Community Service census data, and mortgage expenses. The mortgage calculations assume a 30-year mortgage, a 5.5% interest rate, and a 20% down payment.
Now, let's dissect the key insights from the article, focusing on the top five least affordable housing markets in the U.S.
1. Miami, Florida: Miami claims the unenviable title of the least affordable housing market in the U.S. The median asking price for a home increased by 0.50%, rising from $595,000 to $598,000. Notably, a family with the average household income in Florida ($44,581) would find themselves allocating a staggering 85.67% of their paycheck to cover housing costs.
2. Los Angeles, California: Securing the second spot, Los Angeles maintains its position as the second least affordable city for the sixth consecutive month. Despite a slight decrease of $1,000 in the median purchase price, individuals with an average salary of $69,695 in Los Angeles would need to allocate 83.06% of their income to housing costs, including mortgage payments and taxes.
3. New York, New York: New York City ranks third in terms of housing affordability challenges. The median purchase price increased by 1.93%, requiring residents with an average salary of $68,129 to spend 78.97% of their income on housing costs. Despite this increase, the city has seen a slight improvement from the summer, where homeowners directed 84.61% of their income towards housing costs.
4. Newark, New Jersey: Newark, New Jersey, secures the fourth spot in the list of least affordable housing markets. While specific details about changes in median prices or income allocation percentages are not provided in the article, it is implied that Newark faces significant challenges in terms of housing affordability.
5. Hialeah, Florida: Hialeah, Florida, rounds out the top five least affordable cities. Further details about Hialeah's housing market are not explicitly mentioned in the article, but its inclusion in the list underscores the broader issue of affordability in certain regions.
This comprehensive analysis underscores the complexities of housing affordability, shedding light on the financial burdens faced by residents in these cities. It is essential for policymakers, real estate professionals, and residents alike to be cognizant of these challenges as they navigate the dynamic landscape of the U.S. housing market.
