Top 10 Affordable Housing Markets for America’s Middle Class

If you are looking to buy a home, affordability must be at the top of your mind. But how do you even begin to identify affordable markets? Jed Kolko, Trulia’s Chief Economist, just released a fresh report which lists the top 10 affordable housing markets for America’s middle class. Middle-class affordability has worsened in the past year, especially in expensive markets along the coast. However, thanks to undervalued home prices and historically low mortgage rates, the dream of homeownership is still achievable when compared with the longer-term past.

The Midwest and the South top the affordability chart. If the Midwest sounds like your perfect place to call home, head to Ohio. The Buckeye State claims five of the top ten most affordable housing markets for the middle class: Akron, Toledo, Dayton, Columbus, and Cleveland (in order of most affordable to least). Gary, Indiana comes in a respectable second with Columbia, South Carolina; Detroit, Michigan; Little Rock, Arkansas; and Rochester, New York rounding out the list.

Coastal areas, on the other hand, emerge as the most expensive markets for the middle class. Of the top ten cities that are the least affordable, California nabs seven of those spots. New York/New Jersey, Connecticut, and Hawaii claim the remaining three spots.

It’s important to note that affordability reflects more than price. To decide whether a home is affordable to a middle-class household or not, the report takes into account monthly payments (including insurance, mortgage, and property taxes). Read the report here to understand how affordability has been defined and calculated for each metro.

How construction affects affordability

We all know that demand influences price. The least affordable cities for the middle class added no more than 10 new units per 1000 existing units each year since 1990. On the flip side, the metropolitan areas where new construction is plentiful offer a more affordable housing stock. While demand is only one criteria that factors into the overall affordability of a market, it’s interesting to note that lower construction rates might lend to less affordable housing for the average Joe and Jane.

How education affects affordability

Since income is strongly correlated to education, those with a lower level of education may find homeownership to be out of reach — even in the nation’s most affordable areas. The Washington, D.C. metro area serves as a great example of the education/affordability gap. Only 23% of for-sale homes in Washington D.C. are affordable for those with a high school or lesser level of education. Contrastingly, however, 75% of for-sale homes are within reach for households with a bachelor’s degree. This number increases to 83% for households with a graduate degree. In the most expensive markets many homes remain out of reach of households even with college or graduate degrees. San Francisco is the perfect illustration – only 44% of homes for sale are within reach of graduate-degree households. Affordability by educational attainment for all 100 large metros can be downloaded here.

The net-net on affordability for the middle class

The most expensive markets will most likely remain unaffordable for the near future. However, most U.S. markets are within reach for the middle class. With so many factors influencing a market’s overall affordability, it’s no wonder that home prices are always on everyone’s mind. This recent report gives a solid in-depth analysis of all the factors that make markets affordable, as well as nuances that keep higher priced markets out of reach for the nation’s middle class. If you are in the market for a new home, access the report here to see if you are looking in the right places.