How Housing Affordability Has Dropped Over 5 Years: 5 Metros Where Less Than 30% of Households Can Afford a Home

Housing affordability has sharply declined over the past few years, so much so that less than 30% of households in five major metros earn enough to buy a home.

Based on the rule that individuals should spend no more than a third of their income on housing, Realtor.com® research has found that Los Angeles, Oxnard, San Diego, and San Jose in California and New York City have been hit hardest.

In Los Angeles, for example, where the median list price is $1,150,000, just 13.2% of households can afford to buy a home. The median household income required to buy a home is $244,692.

“A combination of stubbornly high mortgage rates and stubbornly high prices has put homeownership out of reach of a large majority of households along the costly coasts,” says Realtor.com senior economist Ralph McLaughlin.

“California and the Northeast, in particular, are places where just a small share of households can afford to buy the median-priced home,” adds McLaughlin.

While four of the markets on the most unaffordable list are in California, New York City is the sole Northeast city to make the list. Here, the median income required to buy a median-priced home is $184,488. Just 28.6% of New Yorkers can afford this if they kept to the 30% rule.

California is the most unaffordable state

Has “California dreamin'” turned into a nightmare?

Perhaps, given that 4 of the 5 least affordable metros are in the Golden State, with Los Angeles taking the top spot.

“I’ve lost dozens of deals over the last few years because clients were slowly priced out of the market,” says Jameson Tyler Drew, president of Anubis Properties, in the Los Angeles area.

For those who do manage to purchase a home in L.A., Drew says being “house poor” is a common feeling, especially since 2019.

“While I don’t have the breakdown of my clients’ financial situation, I can’t imagine there’s much saving for rainy days,” he says.

Even tear-down homes in L.A. significantly outprice comparable properties in other markets, he adds.

“Los Angeles is just too expensive across the board for most homebuyers. With a de facto ban on building larger housing developments in the city and the state due to a variety of laws, L.A.’s housing stock can’t keep up with normal population growth,” he says.

“To even start to consider a home [here], you have to have an income of almost $250,000 per year. And that’s just to get yourself in the front door, so to speak,” he says.

“Plus, just about everything else in California is more expensive than the rest of the U.S.: gas, water, electricity, child care, restaurant prices. You either have to make a lot of money to live in California, or you have to have gotten into the market long ago to afford it,” he continues.

“It’s no wonder that L.A. has an estimated 75,000 homeless people wandering our streets along with the largest permanent homeless encampment in America on Skid Row downtown.”

Drew adds that he believes the city’s housing crisis could be solved with properly funded and run city services.

Affordability issues are a harsh reality for each and every city in the top 5, listed below.

Los Angeles, CA

Median list price: $1,150,000
Percentage of households who can afford to buy a median-priced home: 13.2%
Median household income required to buy a median-priced home: $244,692

Oxnard, CA

Median list price: $999,125
Percentage of households who can afford to buy a median-priced home: 19.3%
Median household income required to buy a median-priced home: $213,722

San Diego, CA

Median list price: $979,200
Percentage of households who can afford to buy a median-priced home: 20.3%
Median household income required to buy a median-priced home: $208,436

San Jose, CA

Median list price: $1,394,000
Percentage of households who can afford to buy a median-priced home: 26.5%
Median household income required to buy a median-priced home: $292,096

New York City, NY

Median list price: $762,375
Percentage of households who can afford to buy a median-priced home: 28.6%
Median household income required to buy a median-priced home: $184,488