A family with two middle-class incomes can’t afford a median-priced home in most of the largest U.S. cities, according to a Redfin analysis of affordability based on list prices and median incomes. Home prices, which have seen two straight years of 13 percent increases, are rising again this spring. Meanwhile, median household income, when adjusted for inflation, is almost unchanged from 25 years ago. At the intersection of this stagnant wage growth and housing market rebound is the middle-class homebuyer, who also has few homes to choose from thanks to a five-year low in inventory. From a first-year elementary school teacher to a tenured college professor, homebuyers are finding few affordable homes for sale.
Based on non-distressed homes listed on the Multiple Listing Service (MLS) as of March 30, 2014, and 2012 salary data from the Bureau of Labor Statistics (BLS), just 41 percent of homes currently for sale across 40 U.S. cities are affordable for a family earning two median incomes. An affordable home is one for which the monthly payment is 28 percent or less of gross monthly income.
The chart below breaks down affordability across most of the largest cities in the U.S. We’ve indicated the percentage of homes currently on the market that are affordable for each city and occupation, based on BLS salary information. Blue means there are more affordable homes, while red means there are fewer. Not surprisingly, a doctor’s salary can afford most homes in most cities, while one median salary can afford very few homes in any city.
While the overall picture is not great for housing affordability, there are exceptions. More affordable places are scattered throughout the country, although generally not on the coasts. Two middle-class incomes can afford a decent share of homes in Hartford (78%), Richmond (71%), Philadelphia (61%), Atlanta (59%), Minneapolis (56%) and Raleigh (55%). Affordability for specific occupations include:
California has always been a popular place to live. So it goes that in every California city, two median incomes will not allow you to buy the median-priced home. But home affordability for two middle-class incomes isn’t just a problem in the Golden State. Few homes are affordable on these two incomes in Miami (19%), Long Island (24%), Denver (23%), Austin (32%) and Portland, OR (40%), indicating the problem reaches all corners of the country.
