Looking to buy a home? You may want to skip these places. Prices are either so high or incomes so low that many families can’t afford to buy homes here, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index.
Median home price: $455,000 Median income: $68,300 % of homes that are affordable: 28.5%
New York is a hell of a town, but not for homebuyers. Family income levels are barely higher than the national median of $65,000, but home prices are nearly two and a half times as much, according to the National Association of Home Builder/Wells Fargo Housing Opportunity Index.
That puts nearly two-thirds of the New York metro-area’s housing inventory out of reach for the average homebuyer. In Manhattan, home prices are even more stratospheric, averaging a brutal $1,100 a square foot, according to appraiser Miller Samuel. That means this $1.3 million listing for a 1,200-square-foot, two-bedroom apartment on the Upper West Side is pretty much the norm.
And, despite substantial unemployment, 8.5% in October, people continue to move to Gotham and its surrounding boroughs. The metro area gained nearly 100,000 newcomers last year — nearly the entire population of a small city. All of those new residents make it that much harder to find an affordable place.
Median home price: $659,000 Median income: $103,000 % of homes that are affordable: 31.4%
It’s not just in San Francisco where home buying is expensive, many of the surrounding cities and towns — like Sausalito, Berkeley and Daly City — are extremely pricey as well.
Buying a home here would be made even harder if it weren’t for the size of residents’ paychecks. San Francisco is one of only a handful of metro areas where the median household income exceeds six figures thanks, in part, to its thriving tech sector. The area continues to spawn innovative social media and app companies, with Twitter, Instagram and Yelp among the recent successes to call the city home.
Yet while the sky-high paychecks make it easier for some people to afford the multimillion dollar asking prices in San Francisco, it’s a much harder proposition for others who are pulling in a more modest wage.
Santa Ana, Calif
Median home price: $440,000 Median income: $85,300 % of homes that are affordable: 43.5%
The Santa Ana metro area, which encompasses much of Orange County, is home to Disneyland, over a dozen beach communities and some of the most expensive housing in the United States.
Homes in the attractive suburbs here tend to be large and luxurious and can set even high-income earners back financially. Even with a median income of $85,300, lofty home prices make it tough to pay area mortgages.
Median home price: $335,000 Median income: $64,800 % of homes that are affordable: 44.1%
Los Angeles may have its Hollywood stars, Rodeo Drive boutiques and Brentwood mansions, but it’s also home to millions of blue-collar workers employed in the area’s aerospace, energy, shipping and warehousing industries.
While homes are a lot more affordable now than they were during the housing boom — back then the median price was $530,000 and only 3% of the homes sold were considered affordable to median income families — it’s still a challenge for many of the area’s residents to cover the cost of a mortgage.
Things are looking up, however. The unemployment rate has fallen by two percentage points over the past 12 months and home prices are starting to stabilize even further.
Median home price: $402,000 Median income: $87,100 % of homes that are affordable: 44.2%
Drivers on Interstate 95 traveling through Bridgeport might be shocked to learn that the city is one of the least affordable housing markets in the nation. Old factories and warehouses sit idle and many neighborhoods have seen better days.
Indeed, home prices are inexpensive within city limits — you can pay less than $140,000 for a three bedroom, two-bath Cape Cod, for example. But Bridgeport lies within a metro area that also includes Greenwich, Westport and other wealthy enclaves.
Those locales are filled with posh homes occupied by corporate brass, hedge fund managers and professional athletes, all of which have helped to raise the area’s home prices beyond the reach of many families.
Median home price: $530,000 Median income: $105,000 % of homes that are affordable: 46.2%
As it has done in San Francisco, the tech industry has brought explosive growth — and big paychecks — to the San Jose metro area.
The population has boomed here as Silicon Valley firms continue to hire tech talent. All those well-paid techies have money to spend on everything, including housing, which has boosted prices for everyone.
Another factor adding to the sky-high prices: The area is hemmed in by the Pacific Ocean and San Francisco Bay, limiting where developers can build. That drives up land prices, helping to make the housing market one of the nation’s most expensive.
Median home price: $425,000 Median income: $82,700 % of homes that are affordable: 48.8
The rugged landscape that makes Honolulu beautiful also makes it expensive. Located on a narrow strip of land between the sea and the mountains, lots are scarce and incredibly pricey.
Home prices reflect that fact — as well as the cost of materials, most of which have to be shipped in from the mainland.
Salaries, while higher than average, don’t quite match the high cost of housing on Hawaii. Many jobs are in service industries like hospitality, and job-seeking locals often have to compete with mainlanders seeking to build a life in paradise.
Median home price: $339,000 Median income: $75,900 % of homes that are affordable: 54.6%
San Diego residents pay a premium for the area’s fabulous weather, beautiful beaches and healthy, outdoor lifestyle.
Home prices soared during the housing bubble, rising 127% from 2000 to a peak of $500,000 in late 2005. At that point, according to the National Association of Home Builder/Wells Fargo Housing Opportunity Index, only 3.6% of homes sold were affordable for the typical household.
Prices have fallen significantly from that peak, with more than half of all homes now affordable to the average family. But that’s still not good enough to knock San Diego off the least affordable list.
Median home price: $349,000 Median income: $91,900 % of homes that are affordable: 55.3%
Newark doesn’t conjure up images of luxury high-rises or leafy upper-middle-class suburbs, but the communities surrounding it do.
In fact, in the inner city, a typical house costs less than $160,000, according to Trulia. But in nearby Manhattan-satellite cities, like Jersey City and Hoboken, prices are much higher. So, too, are prices in the lush New Jersey suburbs of Madison, Morristown and Short Hills. All of that serves to lift the area’s overall median home prices.
Despite all of these pricey homes, a high median income in the area has helped to raise the area’s affordability score and more than half of homes sold last quarter could be purchased by the typical local family.
El Paso, Texas
Median home price: $141,000 Median income: $41,700 % of homes that are affordable: 61.7%
Typically, the least affordable U.S. housing markets are that way because home prices are so high. Not El Paso. Here, incomes are so low that it’s difficult for a large number of residents to afford even the most modestly-priced homes.
Many of the area’s jobs depend on government largesse with Fort Bliss, the city, and school districts serving as major employers. Agricultural support services, trade with Mexico, and the tourist industry also provide many of the employment opportunities. But pay in these jobs is often at minimum wage or only slightly higher.