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Kenan Jue's Blog

By Kenan Jue | Real Estate Pro in San Francisco, CA

Where Can the Middle Class Afford to Buy a Home?

For the middle class today, homeownership is well within reach in some parts of the country, but in others, it’s more of a pipe dream than the American Dream. Even after taking income differences into account, homeownership affordability varies hugely across the country. Nationally, home prices still look a bit below their long-term average, and mortgage rates are far below their historical norms – which means that buying a home is still cheaper today than during the housing bubble. But this national average hides enormous differences in what the middle class can afford in each local market.

To assess middle-class affordability, we looked at all of the homes for sale across the U.S. through the eyes of the typical household in each metro area. For every for-sale home, we determined affordability based on whether the total monthly payment for that home was less than 31% of the metro’s median household income. (See note below.)

For instance, for a middle-class family in the Chicago metro area, where median household income is $58,911, homes under $254,000 are within reach based on the 31% guideline. Of homes listed for sale in Chicago, 73% are priced below that – which means that nearly three quarters of Chicago homes are “within reach” of the middle class. Remember: we’re defining the “middle class” separately for each metro based on the local median household income.

Trulia_Middle Class_Infographic

Looking for Affordability? Go Midwest, Young Man
In the most affordable housing markets, more than 80% of homes for sale today are within reach of the middle class. Even though incomes in the Midwest and in the South are lower than on the coasts, housing costs are lower there even relative to income, making homeownership more affordable. In Akron, OH – the most affordable of the 100 largest metros – 86% of the homes for sale are within reach of the typical household. Including Akron, the six most affordable metros are in Ohio (Dayton, Toledo, Cincinnati) and Indiana (Gary, Indianapolis).

Most Affordable Housing Markets for the Middle Class

#U.S. Metro

% of for-sale homes affordable for middle class, October 2013

Average size of affordablefor-sale homes, October 2013 (square feet)

% of for-sale homes affordable for middle class, October 2012

1Akron, OH

86%

1,336

86%

2Dayton, OH

85%

1,360

89%

3Toledo, OH

85%

1,332

88%

4Gary, IN

84%

1,512

88%

5Indianapolis, IN

83%

1,656

88%

6Cincinnati, OH-KY-IN

83%

1,444

87%

7Detroit, MI

83%

1,075

89%

8Columbia, SC

83%

1,661

86%

9Columbus, OH

82%

1,400

86%

10Birmingham, AL

82%

1,396

86%

Find out how affordable each of the 100 largest metros are for the Middle Class: Excel and PDF

The least affordable housing market in the U.S. is San Francisco. Even though the median household income is 60% higher in San Francisco than in Akron – which means San Franciscans can afford more expensive homes – the median price per square foot in San Francisco is close to seven times higher than in Akron. As a result, just 14% of the homes for sale in San Francisco are within reach of its relatively well-paid middle class.

Least Affordable Housing Markets for the Middle Class

#U.S. Metro

% of for-sale homes affordable for middle class, October 2013

Average size of affordablefor-sale homes, October 2013 (square feet)

% of for-sale homes affordable for middle class, October 2012

1San Francisco, CA

14%

1,000

24%

2Orange County, CA

23%

1,057

44%

3Los Angeles, CA

24%

1,170

39%

4New York, NY-NJ

25%

978

30%

5San Diego, CA

28%

1,056

46%

6San Jose, CA

31%

1,133

46%

7Ventura County, CA

32%

1,222

56%

8Fairfield County, CT

36%

1,317

41%

9Honolulu, HI

40%

778

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