Buying a home has gotten harder over the past few decades — and it’s gotten a lot harder just in the past few years, which doesn’t bode well for the future.
That’s the conclusion of a new study by Real Estate Witch, which diagnoses the problem with the runaway housing market and looks at which U.S. cities are — and are not — affordable for housing.
According to the study, the main problem is that wages have stagnated while home prices have skyrocketed. Once you adjust for inflation, wages have increased only 15% since 1965, while home values have exploded by 118%.
Worse yet, this pattern seems to be intensifying. In the 14 years since 2008’s financial crisis, household incomes have been flat, increasing by only 8%. In that same timespan, home values have shot up by 25%. It’s hard already to buy a home, considering all the fees and commissions that are added onto a transaction — but market pressures like these make it infinitely more difficult.
Affordability in this report is defined by a house-price-to-income ratio, which compares a buyer’s income to the financial obligations they’ll be taking on. Experts recommend a house-price-to-income ratio of 2.6 to avoid financial hardship, but in 2021, the average house-price-to-income ratio in the U.S. is a staggering 5.4, more than double the recommended level.
So where have home values gotten the farthest ahead of earnings? Where is it super difficult, if not nearly impossible, for the average American to buy a house? Read on for a definitive list of the 25 least affordable cities for housing!
Related Article: How to Choose a Realtor: Expert Secrets
25. New Orleans, Louisiana
The Big Easy is known for its friendly locals, the debauchery of Bourbon Street, and being the birthplace of jazz. In addition to its many cultural offerings, New Orleans offers a small urban footprint that enables a sense of community and great year-round weather.
New Orleans has an average home value of $233,930, which is quite a bit below the national average. However, an average household income of only $70,100 brings the city’s house-price-to-income ratio to a not-so-affordable 3.3.
24. Charlotte, North Carolina
Charlotte is the second-largest financial center in the U.S., behind only New York, and its booming economy and job market has made it one of the fastest-growing cities in the South. With mild weather, countless opportunities for outdoor recreation such as boating and hiking, and a vibrant nightlife scene, Charlotte consistently ranks highly on lists of the best places to live in the U.S.
Charlotte’s average home value is $287,798, which is quite a bit higher than the national average. Although Charlotte’s average household income is also higher than the national average, coming in at $84,200, it’s not quite enough to offset the high home values — the city’s house-price-to-income ratio comes in at a moderately expensive 3.4.
Related Article: The Best Questions to Ask a Realtor
23. Raleigh, North Carolina
Part of the Research Triangle (Durham and Chapel Hill are the other two cities), Raleigh consistently ranks near the top of every “best places to live” list. With historic, walkable infrastructure, a huge amount of cultural offerings, and mild weather year-round, it’s no wonder so many people want to live here. However, like any in-demand destination, it’s not exactly cheap.
Raleigh’s average home value is significantly higher than the national average, coming in at $332,681. Although the city’s average household income is also higher than the national average, clocking in at $95,700, the two benchmarks combine for a not-very-affordable house-price-to-income ratio of 3.5.
22. Jacksonville, Florida
Jacksonville is the largest U.S. city by land mass, and there’s a lot to like packed into that area — countless beaches, parks, and golf courses, along with nightlife, restaurants, and a burgeoning arts scene. The city also enjoys the well-known Florida weather and a cost of living that’s below the national average.
Jacksonville’s average home value is just a hair above the national average, coming in at $272,899, while the average household income in the city is $74,800. Put those figures together, and you get a pretty unfavorable house-price-to-income ratio of 3.6.
21. Tampa, Florida
Tampa offers a relaxed beach atmosphere, along with all the advantages of a major city — including restaurants, shopping, and an arts scene. It’s a magnet for retirees and snowbirds and offers reasonable cost of living along with great weather year-round.
Tampa’s average home value is slightly above the national average, clocking in at $277,811. The same applies to the average household income in Tampa, which comes in at $72,700. Combined, these two benchmarks produce a not-very-affordable house-price-to-income ratio of 3.8.
20. Washington, D.C.
Washington, D.C., has a lot to offer, from historic row houses, world-class museums and restaurants, and a perpetually booming economy, thanks to the city’s biggest employer — the federal government. But as you might imagine, a city with so much to offer isn’t going to be cheap.
The District of Columbia has been one of the hottest real estate markets in the U.S. over the past decade, so it’s no surprise that the average home value here is extremely high — at $497,567, it’s nearly twice as much as the national average. Although D.C. household incomes are also quite a bit higher than the national average, at $129,000, that’s not enough to offset the high cost of housing; put those two measures together and you get a house-price-to-income ratio of 3.9.
19. Nashville, Tennessee
The Music City is one of the biggest tourist hubs in the U.S. and is the world-famous home of country music. The cost of living in Nashville is lower than the national average, but the city’s popularity has pushed up real estate prices.
Nashville has been one of the fastest-growing cities in the U.S. over recent years, so it’s not surprising that its average home value, at $331,279, is very high compared to the national average. Couple that with an average household income that’s not that much higher than average, at $84,300, and you get a not-so-affordable house-price-to-income ratio of 3.9.
Related Article: How to Find a Real Estate Agent
18. Orlando, Florida
One of the fastest-growing cities in the U.S., Orlando offers world-class theme parks, several major sports franchises, and the unmatched Florida weather. Away from the tourist areas, Orlando has a beautiful historic quarter and plenty of arts and culture. The city’s cost of living is higher than the national average, but the state’s absence of an income tax does soften the blow.
Orlando has an average home value of $293,444, which is slightly higher than the national average. However, the average household income in Orlando is right on par with the national average, at $70,800, which produces a very unfavorable house-price-to-income ratio of 4.1.
17. Providence, Rhode Island
This New England city is home to two world-class universities (Brown University, Rhode Island School of Design), and combines historic New England architecture with the walkability and culture of a college town. Though it’s expensive, it’s often seen as a cheaper and slightly more sophisticated alternative to Boston.
Providence sports a very high average home value of $380,447, which is significantly above the national average. Unfortunately, the average household income in Providence isn’t proportionally higher, coming in at $86,500. Combined, the two measures produce an unaffordable house-price-to-income ratio of 4.4.
16. Austin, Texas
There’s not a lot Austin doesn’t have — tons of public green space, a flourishing tech economy, a laid-back college town vibe, and a strong local culture that’s as well-known a brand as Brooklyn or Portland. For all those reasons and more, Austin consistently ranks at or near the top of annual “best places to live” lists. But as you can probably imagine, anywhere this desirable comes with a pretty high price tag.
Austin’s average home value is a sky-high $446,495, which is nearly $200,000 higher than the national average. With an average household income ($98,900) that’s high but not high enough to offset the housing costs, we’re left with a house-price-to-income ratio of 4.5.
15. Phoenix, Arizona
Arizona’s capital is the jewel of the Southwest, with a strong job market, a reasonable cost of living, and great weather — Phoenix prides itself on getting more sunshine than any other city in the U.S.
Phoenix has had one of the hottest real estate markets in the country over the last five years, so it’s no surprise the average home value here is a very high $364,890. With an average household income ($79,000) that’s only a smidgen higher than the national average, Phoenix ends up with a very high house-price-to-income ratio of 4.6.
14. Las Vegas, Nevada
Las Vegas is one of the biggest tourist destinations in the U.S., but it’s also much more than casinos and hotels — retirees are drawn to the weather, and Californians and people from Seattle and Portland are drawn to the relatively low cost of living.
Las Vegas has a very high average home value of $340,184, which places it well above the national average. Coupled with an average household income ($72,400) that’s very close to the national average, Vegas ends up with a not-so-affordable house-price-to-income ratio of 4.7.
13. Boston, Massachusetts
Boston is one of the oldest and most historic cities in the U.S. It’s home to a huge number of colleges and universities, so it has all the culture and walkability you’d expect from a college town, coupled with the old money sophistication you’d expect from a city that was the site of many of America’s early defining moments.
Boston’s average home value is more than double the national average, at $570,860, so right off the bat, you can tell it’s not going to be very affordable, even with an average household income ($120,800) that’s significantly higher than the national average. Put those numbers together, and you get a house-price-to-income ratio of 4.7.
12. Denver, Colorado
The Mile High City is a laid-back, progressive mountain town that’s in the middle of an ongoing boom thanks to getting in early on marijuana legalization. Thanks to this “green boom,” Denver has seen huge population growth recently, coupled with a steep rise in the cost of living.
Denver has been one of the hottest real estate markets in the U.S. over the past few years, so it’s not surprising that its average home value is sky-high — in fact, at $523,841, it’s almost twice the national average. With an average household income of $104,800, Denver’s house-price-to-income ratio comes to a whopping 5.0.
Related Article: The Best Discount Real Estate Brokers for Every Budget
11. Portland, Oregon
Portland is a quirky, bohemian city — think of it as the Austin of the Pacific Northwest. But even if you’re not into tattoos and cheap beer, the city has a lot to offer, from a strong start-up economy to easy access to nature — the Pacific is only an hour away, and two mountain ranges are within a short drive.
Portland real estate values have climbed steadily upward the past decade and currently sit well above the national average, at $492,073. With an average household income that’s still in the high five figures ($96,900) despite an average home that costs nearly half a million dollars, it’s no surprise that Portland sports a house-price-to-income ratio (5.1) that’s basically double what experts recommend.
10. Salt Lake City, Utah
Salt Lake City is a hidden gem of a city, with easy access to five national parks as well as several world-famous ski resorts and cultural touchstones such as the Sundance Film Festival in nearby Park City. Even better, the cost of living in Salt Lake City is quite reasonable for a major city, although that doesn’t apply to the housing market.
Salt Lake City has seen its local real estate market boom over the past decade, and the average home value there is just under half a million dollars, at $485,813. However, household incomes in Salt Lake City haven’t kept pace, and the city average sits at $92,900. That makes for a house-price-to-income ratio of 5.2, or exactly twice what financial experts recommend.
9. Seattle, Washington
Home to Amazon, Microsoft, and grunge rock, Seattle has been a major player in recent American history. With mild year-round weather (if you don’t mind rain) and strong local culture, Seattle offers a very high quality of life. However, it’s not cheap.
Seattle has seen huge increases in home values in recent years, and its average home value is well over double the national average, at $633,613. Although the metro area has a healthy average household income of $115,700, it’s not enough to offset the city’s sky-high housing costs. In the end, Seattle has a house-price-to-income ratio of 5.5 — the first city on this list with a ratio that exceeds the national average of 5.4.
8. Sacramento, California
Sacramento is often overshadowed by its more glamorous California sister cities, but it has a ton to offer, from copious green space to the wonderful year-round California weather and booming economy.
California’s state capital has an average home value of $511,089. Combine that with an average household income of $91,100 — which is high, but not high enough to offset Sacramento’s extremely high housing costs — and you’re left with a house-price-to-income ratio of 5.6.
7. Miami-Fort Lauderdale, Florida
Miami is well known for world-class nightlife, a booming arts scene spearheaded by the annual Art Basel art fair, tropical weather, miles of beaches, and a melting-pot culture that’s like nowhere else in the U.S.
Miami-Fort Lauderdale has been one of the hottest markets for national and international buyers of the past decade, so it’s no surprise that the average home value is high, at $342,684. When you combine that with an average household income ($61,000) that’s actually lower than the national average, you get a house-price-to-income ratio (5.6) that spells “unaffordability.”
6. Riverside, California
Although it’s technically part of the Greater Los Angeles area, Riverside is an independent city unto itself, with a strong agricultural identity, historic landmarks and neighborhoods, and a major university (UC Riverside).
Riverside has an average home value of $462,765, which is about $200,000 above the national average; coupled with an average household income of $77,500, that comes to an unhealthy house-price-to-income ratio of 6.0.
5. New York, New York
The Big Apple needs no introduction — from Broadway to Wall Street to Harlem to Brooklyn, New York is the cultural center of the U.S. But as you might imagine, the city that has everything isn’t cheap.
Long known as one of the most expensive cities in the U.S., if not the world, New York starts off the top five with an average home value ($538,412) of well over half a million and just a hair under double the national average. With an average household income of $81,700 that’s not significantly higher than the national average, it’s no surprise that New York has a sky high house-price-to-income ratio of 6.6.
4. San Diego, California
San Diego is well-known for having some of the greatest beaches and weather in the U.S., and although it’s also one of the most expensive cities in the country, many locals consider it a “sunshine tax” — an acceptable price for living in a year-round paradise. Of course, living in paradise comes with a hefty price tag.
San Diego has an average home value of $737,627, which is almost triple the national average. The city’s average household income is also higher than the national average, at $95,100, but not high enough to make local housing affordable. Combine those figures, and you get a not-very-affordable house-price-to-income ratio of 7.8, or about triple the recommended level.
3. San Francisco, California
As the birthplace of Big Tech, San Francisco has experienced a once-in-a-century boom. Combine unparalleled opportunity and wealth with a historic city, strong culture, and mild climate, and you have one of the most expensive cities in the world.
San Francisco’s housing market has been red-hot for years, so it’s no real surprise its average home value ($1.24 million) is almost unbelievably high. Even though the city has an average household income more than double the national average, at $151,300, it’s not enough to offset the costs of Bay Area housing. The third-least affordable city in the U.S. has a house-price-to-income ratio of 8.3, which is more than triple the level recommended by experts.
2. San Jose, California
Often considered the unofficial capital of Silicon Valley, San Jose’s close proximity to Google and Apple headquarters makes it home to one of the wealthiest workforces on earth. So you probably aren’t surprised that it’s a pretty pricey area.
San Jose comes in second on this list with a truly staggering average home value of $1.37 million, combined with an average household income of $151,300 — very healthy but not anywhere near high enough to offset housing costs. In the end, San Jose is the second-least affordable city in the U.S., with a house-price-to-income ratio of 9.1, which is well over triple the recommended level.
1. Los Angeles, California
Although the previous two spots on this list belonged to Big Tech, this spot proves that Hollywood is still king when it comes to generating wealth. With legendary weather, a diversified and booming economy, and the prestige of being a cultural capital, it makes sense that L.A. tops this list.
Los Angeles clinches the title of “least affordable city in the U.S.” with an astronomical average home value of $782,544, coupled with a pedestrian average household income of $80,000. Put those together, and you get a house-price-to-income ratio of 9.8, more than triple the recommended level and nearly double the national average.
Related Article: Must-See Clever Real Estate Reviews! (Learn the TRUTH)