The local median salary is enough to affordably purchase the typical home in just two of the 50 largest U.S. metro areas: Detroit and Pittsburgh, according to a new report from Clever Real Estate in St. Louis.
Clever says it analyzed the 50 largest metro areas in the U.S. and all 50 states to determine where total housing costs exceed 28 percent of the median household’s gross income, a well-known baseline for housing affordability.
One of only two affordable metros, Detroit’s household income is $72,574, but homes sell for a median of $195,000 — less than half the national average ($438,000), according to the report. Residents earn a median of $12,100 more than needed to afford the typical home.
“Those looking for truly affordable living better enjoy Motown music and Detroit-style pizza, as the Motor City offers a uniquely beneficial situation for budget-minded buyers,” writes Clever Real Estate Data Writer Nick Pisano in the report. “Detroit also stands out for its deep affordability in other ways. For example, residents earning the median metro salary could affordably buy a home as expensive as $234,018, nearly $40,000 more than the city’s typical property.”
The report adds that the Detroit area offers moderate property tax costs for the typical home at $1,809 annually, while Detroit’s typical homeowners insurance premium of $2,343 also is relatively affordable.
“Those looking to affordably buy a home with 0 percent down need to start shopping here as well, as Detroit is the only major U.S. metro where a household earning the local median income could do so, clearing the bar by $1,248.”
Similarly, Pittsburgh’s median income of $72,532 is around the average, but homes cost $250,000.
Although Detroit and Pittsburgh are the only truly “affordable” cities, seven cities are less than $15,000 short of the median income residents would need to buy a typical home:
- Philadelphia ($864 short)
- Cleveland ($1,564 short)
- Cincinnati ($2,492 short)
- Louis ($4,071 short)
- Indianapolis ($6,259 short)
- Louisville ($10,634 short)
- Buffalo ($12,452 short)
Meanwhile, Iowa is the only truly affordable state, with a household income of $71,433 and a median home price of $239,000. Iowans making the median income earn $997 more than needed to afford the typical home.
The most affordable states are primarily in the Midwest, with Indiana, Ohio, West Virginia, and Missouri rounding out the top five.
Nationally, with a 20 percent down payment, a 6.65 percent mortgage rate, and average home insurance and property tax costs, homebuyers would need a household income of $123,226 to afford the median-priced U.S. home of $438,000. The median household income, however, is just $77,719 — a difference of $45,507.
The median home would need to cost $276,247, or more than $160,000 less, to be affordable for the typical household.
The West is home to seven of the 10 most unaffordable cities, with four of the five least affordable cities located in California:
- San Jose
- San Francisco
- Los Angeles
- San Diego
- New York
- Seattle
- Miami
- Boston
- Riverside, Calif.
- Denver
To view the full report, visit here.
