Revealed! These Are America’s Most Unaffordable Housing Markets



iStock; realtor.com



In the words of President Donald Trump, the nation’s economy is booming. After clawing our way out of a terrible recession, Americans are finally working and getting raises again. But please, hold the applause.

Finding a job these days is the easy part. But scoring one that pays enough to cover the monthly rent or mortgage bill with enough left over for everything else is a big challenge for many folks. And it’s getting worse.

Home list prices have jumped 41.7% over the past decade, while median incomes have climbed just 23.8% during the same period. That’s resulted in plenty of places across the nation becoming unaffordable for the folks who have long lived there.

Affordability is a top-of-mind concern for renters and aspiring home buyers. So realtor.com wanted to find out: Where is the gap widest between what people earn and what they shell out for housing? What we found wasn’t necessarily the most flat-out expensive real estate markets. No, our focus is on the places where too many folks are spending way above the widely recommended ceiling of 28% of their household income on a place to live.

And that can be a perilous financial line to walk.

“The more you spend on housing the less you have to spend on other things you value and to fund your financial goals,” says Roger Ma, a financial planner at Lifelaidout and New York City–based real estate agent.

Some cities made our list because foreign, out-of-state, and second- and third-home buyers have driven prices out of reach of the locals, many of whom work in lower-paying, tourism-related jobs. Others are popular with retirees, who usually have lower incomes or are living on savings. And the cheaper places in our rankings are here because of low, local wages and not enough high-paying job opportunities.

To come up with our findings, we looked at the median monthly housing costs in roughly 500 metros* to pinpoint the markets where folks are spending the most on their homes. We did this by dividing the median monthly costs for renters and homeowners by the median monthly household income. We limited our ranking to just one metro per state. And keep in mind that these are median figures, so half the folks in these cities are paying even more than the figures cited. Sometimes much more.

So let’s take a look at where folks are stretched the thinnest.

Most unaffordable cities

Claire Widman


1. Santa Cruz, CA

Median list price: $895,800 Median monthly housing cost: $1,840 Median household income: $73,663 Share of income going toward housing*: 30%

Santa Cruz three-bedroom home.

realtor.com


On a trip to Santa Cruz Beach Boardwalk, an amusement park that runs a mile along the Pacific coastline, parkgoers can ride the Giant Dipper roller coaster and eat fresh-roasted corn at Barnacle Bill’s. This town has a down-to-earth feel—and that attracts deep-pocketed techies who come down from nearby San Francisco and San Jose, CA, in attempts to escape the hustle and bustle for a weekend of beachside fun.

“We have a lovely bookstore [in Santa Cruz] that is the epicenter of downtown, and great coffeehouses … also, beaches, redwoods, and Big Sur around the corner,” wrote a niche.com neighborhood reviewer who moved from Silicon Valley to Santa Cruz.

But this loveliness has a price: All these second-home buyers pushed prices up in Santa Cruz, making it the country’s fifth most-expensive U.S. housing market. The San Francisco Bay Area escapees are purchasing Instagrammable, luxury, two-story homes on scenic hillsides with ocean and mountain views. They can afford it—unlike the long-term locals, who have an increasingly hard time competing. There’s simply not as many high-paying jobs in this town.

For years, the city’s housing market experienced double-digit price increases. But that’s changed as many buyers can no longer afford the seaside city. In the past 12 months, prices are essentially flat and inventory is up 45%.

“I’m seeing some buyer pushback,” says Realtor Kaelin Wagnermarsh of Keller Williams Realty Santa Cruz.

2. Miami, FL 

Median list price: $385,100 Median monthly housing cost: $1,280 Median household income: $51,758 Share of income going toward housing: 29.7% 

Miami mansion

realtor.com


Let’s state this upfront: Living in Miami ain’t cheap. Just off its shores, exclusive Fisher Island in Miami-Dade County is one of the nation’s most expensive enclaves, packed with luxury, high-rise condos—many of them second homes for the wealthy— priced over $5 million. Luxury suburbs like Doral, 15 miles outside of downtown, have their share of 10,000-square-foot mansions. And let’s not forget Paramount Miami Worldcenter, a 60-story luxury downtown condominium that will be the sixth-tallest building in Florida.

Over 9% of homes in the Miami market are second homes, many purchased by non-Americans. But unlike other cities like New York or San Francisco, which also have a lot of affluent foreign buyers, Miami doesn’t have the similar high-paying jobs that help locals to compete.

But there might be some relief for would-be home buyers: January home prices in Miami are down 1% year over year, and inventory is up 11.8%.

3. Grants Pass, OR

Median list price: $334,600 Median monthly housing cost: $918 Median household income: $40,705 Share of income going toward housing: 27.1%

A three-bedroom home in Grant Pass.

realtor.com


The affordability gap is a hot-button issue in Grants Pass, credited with playing a leading role in the area’s growing homeless population. The problem is so bad in Josephine County, home to Grants Pass, that a developer last month proposed building a series of tiny homes to house some of those living on the streets.

Grants Pass is generally known as an increasingly popular retirement town, with most shops closing at 7 p.m. Many seniors come here for the calm Oregon climate and the fishing or boating on Rogue River, which runs through the city. Unfortunately for locals, newcomers are paying top dollar for homes like this riverfront log cabin with a wood interior. Longstanding residents, many of whom have fixed incomes, are finding themselves boxed in.

4. Atlantic City, NJ

Median list price: $240,000 Median monthly housing cost: $1,290 Median household income: $57,514 Share of income going toward housing: 26.9%

Atlantic City

DenisTangneyJr/iStock


During the summer, the boardwalk in Atlantic City is teeming with tourists buying street food and cheap souvenirs. But Atlantic City’s big draw is its casinos—and that means plenty of lower-paid, service jobs for locals. But these gigs make it tough to afford the area’s luxury, beachfront condos and even the significantly more affordable single-family homes and condos.

Atlantic City also has a fair number of retirees who don’t necessarily have huge take-home pay, and tend to spend a higher share of income on housing. They flock here because Atlantic City is still a relative bargain compared with much of the Northeast.

But homes prices in Atlantic City are growing fast, rising 6% year over year in January. That’s because after a number of hard years, the city is on the upswing again—rebuilding after Hurricane Sandy, and even opening new casinos after decades of closings.

5. New York, NY

Median list price: $515,100 Median monthly housing cost: $1,588 Median household income: $72,205 Share of income going toward housing: 26.4%

Brooklyn brownstones

realtor.com


Complaining about rent is about as New York as pizza by the slice. These sky-high monthly fees make it hard for many New Yorkers to save up for the down payments they need to purchase homes (and unlike many places, you actually need the full 20% down payment to buy here). Naturally, condo and home prices are pretty darn expensive.

Prices in the city have long been astronomical thanks to the limited supply of housing, the many highly paid professionals who work there, and the slew of international home buyers. But fortunately, there is a big range of housing available, from high-end apartments and condos in Manhattan to $3 million brownstones in Brooklyn and