Housing affordability varies among the biggest cities in the U.S. While the average household can comfortably afford a median-valued home in Detroit, residents in New York City and Los Angeles are faced with trailing incomes and climbing home prices.
A recent poll from the National Association of Home Builders (NAHB) revealed that four in five Americans believe the nation is going through a housing affordability crisis. As rising costs continue to surpass wage growth, the middle- and low-income households are the ones more at risk.
The latest data from SmartAsset indicates that while housing affordability is an issue around the U.S., circumstances vary from one location to the other. In 2018, the median income was $61,937 and the median home value was $229,700. However, individual cities and states face different challenges in helping households afford more home – whether they are fighting low incomes, debt or skyrocketing real estate prices.
Specifically, the study looked at median household income, average non-mortgage debt, median home value and down payment in different areas. The results were not surprising: the Coasts struggle the most with affordability, while the Midwest and South are best positioned to be able to afford homes.
Detroit & Oklahoma City: Most Affordable Housing Markets
According to SmartAsset, Detroit, MI is the city where the average household can afford the most home. In 2018, the median household income was $31,283 and the average non-mortgage debt was $22,604. If residents saved 10% of their income for five years for a down payment, they could afford a $97,100 home. Compared to the median home value of $51,600, households could purchase a property that’s 88% more expensive.
Oklahoma City, OK also ranks highly for how much home households can afford. The average household here has a median income of $53,973 and $25,000 in non-mortgage debt. If this debt would be paid in 10 years at a 6% interest and the household saved 10% of their income for five years, the average resident could afford a $230,000 home – or 42% more than the median home value, which is $161,700.
Other cities where residents can afford more home than the median home value are Indianapolis, IN (40.9% more home), Omaha, NE (40.8%) and Tulsa, OK (36.7%). Despite having the highest median home value out of all four states, residents in Omaha also have the highest median household income – $59,266 – thus easing affordability.
Least Affordability in New York & Los Angeles
It may come as no surprise that NYC, NY tops the list of cities where residents can afford a home the least. The average household here earns a median income of $63,799 and has a non-mortgage debt load of $24,087, similar to that of other states. However, the median home value in the New York City real estate market stands at $645,100 – much higher than other cities. Hence, the average household can afford a $247,000 home or 38.3% of the median home value.
The next city where residents can afford the least home is Los Angeles, CA. With an average household income of $62,474 and $24,413 in non-mortgage debt, residents can afford a $276,000 home. That’s 40.4% of the median home value, considering homes in Los Angeles sell for $682,400, on average.
The average household can also afford the least home in San Francisco, CA (43.3% of the median home value), Long Beach, CA (46.6%) and Miami, FL (46.8%). Despite having the lowest median home value at $350,400, Miami has a median household income of only $41,818, far below the national average.
Houston & Minneapolis Strike a Balance
The average household in Houston, TX earns a median income of $51,203 and has $26,322 in non-mortgage debt. Residents here can afford a $180,000 home, or 100.5% of the median home value of $179,100.
Households in Minneapolis, MN also break even when it comes to how much home they can afford. Residents can afford 100.6% home, considering the median home value is $259,500 and their median income of $63,590 with $24,259 in non-mortgage debt.
While the housing affordability crisis may be taking its toll on U.S. residents, there are still cities where the situation is quite balanced. Out of the 50 analyzed urban centers, households can still afford a median-priced home and manage to pay off debt in 27 cities. Here’s the full picture: