A recent economics report has shown that Americans now need to earn an average of $108,000 per year in order to afford a single-family home in most cities. This is a significant increase from just five years ago when the required income was only $56,800. The report also revealed that only 36% of households were able to afford a home in the last quarter, a sharp decrease from 59% in 2019.
The rising housing costs have made it especially difficult for residents in cities like San Jose, San Francisco, Los Angeles, San Diego, and Honolulu, where less than 15% of households can cover their housing expenses. On the other hand, the most affordable cities are located in the Midwest and South, such as Cleveland, Louisville, Detroit, St. Louis, Oklahoma City, and Memphis, where approximately half of households earn enough to afford a home.
In a list of the most affordable cities from the study, places like Decatur, Illinois; Cumberland, Maryland; Youngstown, Ohio; Charleston, West Virginia; and Elmira, New York were highlighted. Nearly two-thirds of households in these cities could afford a single-family home.
The housing costs have continued to rise, with the average U.S. home sale price reaching $394,000 in June, according to data from Redfin. This marked a 4.4% increase from the previous year. Additionally, a report from the National Association of Realtors revealed that the share of first-time homebuyers has dropped to 24% in 2024, the lowest percentage since data collection began in 1981.
Overall, the increasing housing costs and income requirements have made it challenging for many Americans to afford a single-family home, especially in major metropolitan areas. As the trend continues, it is crucial for policymakers and stakeholders to address housing affordability to ensure that more households have access to homeownership opportunities.
