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The U.S. Cities Where It Takes the Longest to Be Able to Afford to Buy a Home

Metro areas in California look especially bleak in this analysis.

Flickr/Images Money

In places like San Francisco and Manhattan, housing prices have soared to record highs, pricing out large swaths of the middle class. But in parts of the Rustbelt and Sunbelt, home prices have still not fully recovered from the devastating effects of the Great Recession. With Americans set to spend nearly $10 trillion on housing over the next five years, the question remains: Where are we spending the most, especially when compared to our incomes, to purchase homes?

My Martin Prosperity Institute colleague Charlotta Mellander and I developed a simple metric that allows us to compare the burden of a home purchase across metro areas. We calculated the number of years’ worth of income, on average, it would take to buy a home in metros across the country. To do this, we compared data on the average estimate sale prices of homes in metro areas from Zillow to data on average incomes in those same metro areas for both families and singles from the U.S. Census.

It’s worth noting that our calculations look at the number of years of income it would take to pay for the purchase price of a home, and do not take on the added expense of mortgage interest, which would drive the cost—and number of years it would take to pay for a home—considerably higher. It's also worth noting that this doesn't take into account how most people purchase homes: by saving up a down payment. Instead, this metric is intended as a method of comparing the relative burden of purchasing a home by location.  

While exploring our maps and data, keep in mind the basic rule of thumb used by real estate agents and mortgage dealers around the country: The purchase price of a home should be roughly 2.6 times one’s income.

The first map below, by our MPI colleague Isabel Ritchie, charts the number of years of income it would take for the average household to buy a home in metro areas across the country. The metros where households pay more of their income are in the deepest purple, while those where people pay the least are in light blue.

(Ritchie, MPI)

The metros where households have to devote the most years of income to housing are mostly on the West and East Coasts, in California, Washington State, Oregon and Arizona, and across the Boston-Washington corridor. Housing is also pricey in terms of years of income in college towns like Boulder, Colorado (5.3), Eugene, Oregon (4.9), Ithaca, New York (4.0), State College, Pennsylvania (3.8), and Ann Arbor, Michigan (3.8).

The table below lists the ten metros where housing costs the most in years of income. Nine of the ten are in California, the exception being Honolulu. In these locations, the price of a home is equivalent to about seven years of income. In the top three metros, the price of a home equals roughly nine years of income. Nearly six in ten of the metros where it takes more than five years’ of income to buy a home are in California.

Metros where it takes the most years of income to buy a home
Rank Metro

Years of Income to Buy a Home

1 Santa Cruz, CA 9.3
2 Los Angeles, CA 9.0
3 San Jose, CA 9.0
4 San Francisco, CA 8.8
5 Santa Barbara, CA 8.5
6 San Luis Obispo, CA 8.4
7 Honolulu, HI 8.2
8 Santa Rosa, CA 8.0
9 San Diego, CA 7.6
10 Salinas, CA 7.4

Los Angeles jumps to the top of the list when we look only at large metros (those with over a million people). In addition to the usual California metros, New York, Boston, Seattle and Portland join the ranks of the ten most expensive housing markets. It would take more than four years for the average household to buy a home in Miami (4.4 years of income), Denver (4.4), Providence (4.2) and Washington, D.C. (4.0).

Large metros where it takes the most years of income to buy a home
Rank Large Metro

Years of Income to Buy a Home

1 Los Angeles, CA 9.0
2 San Jose, CA 9.0
3 San Francisco, CA 8.8
4 San Diego, CA 7.6
5 New York, NY 5.8
6 Sacramento, CA 5.8
7 Riverside, CA 5.3
8 Boston, MA 5.0
9 Seattle, WA 5.0
10 Portland, OR 4.7
(Metros with over one million people)

Now look at the places where housing is the least expensive. In these places, households would have to devote less than double their income for a home. It’s a veritable who’s who of hard-hit Rustbelt metros.

Metros where it takes the least years of income to buy a home
Rank Metro Years of Income to Buy a Home
1 Anderson, IN 1.4
2 Saginaw, MI 1.6
3 Lawton, OK 1.8
4 Terre Haute, IN 1.8
5 Youngstown, OH 1.9
6 Elmira, NY 1,9
7 Kokomo, IN 1.9
8 Topeka, KS 1.9
9 Rockford, IL 1.9
10 Flint, MI 1.9

When we look at large metros, the list is also dominated by Rustbelt locations, as the table below shows.

Large metros where it takes the least years of income to buy a home
Rank Large Metro Years of Income to Buy a Home
1 Detroit, MI 2.2
2 Memphis, TN 2.3
3 St. Louis, MO 2.4
4 Rochester, NY 2.4
5 Kansas City, MO 2.4
6 Pittsburgh, PA 2.4
7 Cleveland, OH 2.5
8 Indianapolis, IN 2.5
9 Oklahoma City, OK 2.6
10 Louisville-Jefferson County, KY 2.6
(Metros with over one million people)

But there are some surprises. While urban economists often argue that housing is more affordable in sprawling Sunbelt cities with looser land use regulations and where it is easier to build out rather than up, it costs more in terms of years of income to buy a house in Phoenix (3.8) or Las Vegas (3.6) than in Austin (3.6) or Chicago (3.1).

*****

Now let’s take a look at the patterns for singles. The number of Americans living by themselves has doubled since 1960, to 28 percent. Whereas households can often combine multiple incomes to buy homes, single households are by definition dependent on one income stream.

Singles face a great housing burden. It takes the average household 3.3 years to save up for a home, but the average single can expect to spend 6.1 annual paychecks to do the same.

The same bicoastal pattern comes through again, only more pronounced, in the map below. The most expensive metros are along the West Coast, in California, Oregon, Washington State and Arizona, and throughout the Boston-NYC-Washington corridor in the East. Honolulu is pricey, as are college towns like Boulder, Colorado (11.0), Eugene, Oregon (9.6), State College, Pennsylvania (7.7), Ann Arbor, Michigan (7.3), Ithaca, New York (6.9) and Madison, Wisconsin (6.8)

(Ritchie, MPI)

In the priciest metros, again most of them in California, it would take singles a staggering 15 to 20 years of income to buy a home, as the table below shows.

Metros where it takes the most years of income for singles to buy a home
Rank Metro Years of Income to Buy a Home
1 Santa Cruz, CA 19.9
2 San Francisco, CA 16.8
3 San Jose, CA 16.2
4 San Luis Obispo, CA 15.5
5 Los Angeles, VA 15.3
6 Santa Barbara, CA 15.1
7 Honolulu, HI 15.0
8 Napa, CA 14.9
9 Santa Rosa, CA 13.9
10 San Diego, CA 13.1

When we look only at large metros, San Francisco jumps to the top of the list, and New York, Boston, Seattle and Providence join the pricey California metros. Singles would have to devote roughly eight years of income to buy a home in Portland (8.4), Denver (7.8) or Miami (7.6).

Large metros where it takes the most years of income for singles to buy a home
Rank Large Metro Years of Income to Buy a Home
1 San Francisco, CA 16.8
2 San Jose, CA 16.2
3 Los Angeles, CA 15.3
4 San Diego, CA 13.1
5 New York, NY 10.9
6 Boston, MA 10.4
7 Sacramento, CA 10.2
8 Riverside, CA 9.8
9 Seattle, WA 9.2
10 Providence, RI 8.7
(Metros with over one million people)

Troublingly, housing remains a pricey proposition for singles even in the most affordable of metros. As the table below shows, even in these places, the price of a home is equivalent to 2.5 to 3.5 years of singles’ incomes.

Metros where it takes the least years of income for singles to buy a home
Rank Metro Years of Income to Buy a Home
1 Anderson, IN 2.5
2 Saginaw, MI 2.9
3 Flint, MI 3.1
4 Lawton, OK 3.1
5 Elmira, NY 3.2
6 Warner Robins, GA 3.3
7 Battle Creek, MI 3.3
8 Youngstown, OH 3.4
9 Rockford, IL 3.5
10 Charleston, WV 3.5

When we turn to large metros, a combination of Rustbelt and Sunbelt locations jump to the fore: Memphis, Detroit, and Cleveland of the former, Houston, Oklahoma City, Dallas-Fort Worth, and Atlanta among the latter. Still, even in these places, singles must use the equivalent of four years’ of income to buy a home.

Large metros where it takes the least years of income for singles to buy a home
Rank Large Metro Years of Income to Buy a Home
1 Memphis, TN 3.9
2 Detroit, MI 4.1
3 Houston, TX 4.4
4 Oklahoma City, OK 4.4
5 Dallas-Fort Worth, TX 4.5
6 Atlanta, GA 4.5
7 Indianapolis, IN 4.5
8 Cleveland, OH 4.5
9 Birmingham, AL 4.6
10 St. Louis, MO 4.6
(Metros with over one million people)

Again there are some surprises: It would take fewer years of work for the average single to buy an average home in Washington, D.C. (6.5), than in Baltimore (6.7) or Philadelphia (6.7). It would take about a year less work for the average single to buy a home in Chicago (5.8) than Phoenix (6.6). It takes slightly less work for the average single to buy a home in Austin (6.0) than Milwaukee (6.3)

Housing is the single most important and most expensive financial decision most Americans make. And in many places it is increasingly a financial burden. Maybe it’s time we ask ourselves a basic question: How many years of your working life do you want to devote to paying for your home? It depends on where you choose to live.

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