The dream of homeownership is becoming just that for millions of Americans — a dream.
For the nation’s middle class, owning a home in a major metropolitan area is becoming harder and harder and, depending which city you want to lay down roots, next to impossible for some.
A new study from Creditnews.com found that soaring interest rates, inflation and other factors have priced out middle class Americans from purchasing homes in nearly half of the 100 largest metropolitan areas in the country.
In 2024, 48 of those metro areas are considered unaffordable for middle class Americans. Only five years ago, that number was as low as 9, researchers said, with middle class households being able to “comfortably” afford to buy a typical home in those areas.
Even worse, those who are considered “lower-middle class” have been priced out of an astounding 93 of the top 100 metro areas, up from only 33 in 2019.
“There’s no two ways about it: Housing affordability has worsened significantly since COVID,” said Sam Bourgi, senior analyst at Creditnews Research.
Researchers say there are still a decent amount of “affordable” metros across the country for middle-class families, but they are in “rapid decline.”
The areas that were found to be the most unaffordable are largely in, you guessed it, California.
San Jose, San Francisco, Los Angeles, San Diego and Oxnard/Thousand Oaks, as well as Honolulu, Hawaii, are the most unaffordable metros for the middle class, according to the study.
The top five cities that have seen the largest increase in housing costs since the COVID-19 pandemic started are all in the Golden State, with the previous four California cities and Oxnard rounding out the list.
Below are the ten least-affordable metro areas for the middle class alongside the qualifying income needed to afford an average home:
- San Jose-Sunnyvale-Santa Clara: $425,614
- San Francisco-Oakland-Berkeley: $310,029
- Los Angeles-Long Beach-Anaheim: $256,286
- San Diego-Chula Vista-Carlsbad: $253,157
- Urban Honolulu, Hawaii: $235,543
- Oxnard-Thousand Oaks-Ventura: $232,500
- Seattle-Tacoma-Bellevue, Washington: $196,971
- Boston-Cambridge-Newton, Massachusets/New Hampshire: $181,971
- New York-Newark-Jersey City, New York/New Jersey/Pennsylvania: $173,786
- Bridgeport-Stamford-Norwalk, Connecticut: $163,371
The areas where middle class families might fare better are mainly located in the Midwest, the Rust Belt and parts of Texas. The most affordable metro areas in 2024 are Youngstown, Ohio; Toledo, Ohio; McAllen, Texas; Scranton, Pennsylvania; and Wichita, Kansas.
Bourgi and his colleagues defined middle class and lower-middle class by using Pew Research’s household income percentile ranges. Middle class families are those that earn an annual household income that falls within a range of $58,021 and $94,000.
A home is considered affordable if the monthly mortgage and housing payment doesn’t exceed 28% of a household’s gross income, researchers said. They stress that qualifying income and monthly housing costs vary significantly from city to city.
The researchers say there are “two Americas” when discussing housing: affordable or unaffordable. The root of the issue, they say is pretty straight forward, especially for California.
“In large coastal cities, the supply of housing hasn’t kept up with demand as more people flock to those places for work or lifestyle,” they wrote. “In recent years, Americans have been stymied by the largest housing supply shortage in history—a well-documented contributor to record home prices.”
Those factors are compounded by a spike in mortgage rates that have priced even the most affluent and qualified out of the market.
The study concludes that, while the middle class isn’t as strong as it once was, the housing crisis hasn’t gone unnoticed.
“The issue is top of mind at the White House, with the Biden administration proposing tax credits and other home buying initiatives to make it easier for the middle class to enter the market,” the report states.
Still, they say it remains to be seen when, or if, housing will become more attainable in the future.
To read the full story and more about the methodology used by Creditnews Research, click here.