T. Lynne Pixley for The New York TimesA home for sale earlier this year near Atlanta.Despite a drop in prices since the housing market crash and historically low mortgage rates, many families still can't afford to buy a home in many major cities, a new analysis finds.
Despite lower prices, a median-income household can afford a median-priced home in just 14 of the country's 25 largest metropolitan areas due to rising expenses and stagnant wages, research from Interest.com finds.
The home affordability study finds that Detroit, Atlanta and Minneapolis are the most affordable markets, and San Diego, New York and San Francisco are the least affordable.< /p>
“Even after years of declining home prices and record-low mortgage rates, median-income households are unable to afford a median-priced home in nearly half of the metropolitan areas that we looked at,†explained Mike Sante, the site's managing editor, in a statement.
To determine their rankings, Interest.com gathered the median home prices in the 25 largest metropolitan areas in the United States and calculated how much financing would be required for a buyer with a 20 percent down payment. The site crunched data from the National Association of Realtors, the Census Bureau and other sources, including data on insurance costs and taxes, to arrive at its findings.
Interest.com gave each market a letter-grade for overall affordability, as well as a “paycheck power†rating, which indicates the percentage by which the median income exceeds, or falls short of, the income necessary to buy a median-priced home.
Atlanta scored an “A†on affordabili ty and a paycheck power rating of 40 percent, which means that the median income in the city exceeds that needed to buy a median-priced home there by 40 percent. The city has relatively low home prices - the median sale price of $103,200 is well below the average of nearly $230,000 for the 25 largest cities - and slightly higher income. (Detroit's rating was even higher, but the city represents a special situation, Interest.com notes, because the low home prices reflect a large number of abandoned properties).
The least affordable city was San Francisco, where the median income falls 33 percent short of the income needed to buy a median-priced home.
The most-affordable and least-affordable markets and their paycheck power ratings are:
1. Detroit (+45.32 percent)
2. Atlanta (+40 percent)
3. Minneapolis (+32.2 percent)
4. Phoenix (+23.67 percent)
5. St. Louis (+23.49 percent)
Least Affordable Metropolitan Areas
21. Los Ange les (-12.52 percent)
22. Miami (-12.59 percent)
23. San Diego (-25.9 percent)
24. New York (-29.71 percent)
25. San Francisco (-32.76 percent)
Do you live in one of the more expensive markets? Do you think you will be able to buy a home there?
