Los Angeles Tops the List for Highest Home Price-to-Income Ratio in the US

The Challenge of Homeownership in America

Homeownership remains a financial challenge for many Americans due to the combination of rising house prices and stagnant wages. The question arises: which U.S. cities are the least affordable? A useful metric to gauge housing affordability is the home price-to-income ratio. This ratio measures the relationship between the median home price and the median household income.

Using data from Construction Coverage’s analysis of Zillow and U.S. Census Bureau data, a map created by Kayla Zhu from Visual Capitalist reveals the home price-to-income ratio of 54 large cities (with populations over one million) in the U.S.

Coastal U.S. Cities Struggle with Housing Affordability

The following table presents the home price-to-income ratio, median home price, and median household income for 54 large cities in the United States. The cities with the highest ratios are predominantly located on the West Coast, particularly in California. The top four cities with the highest ratios are all in California, while other major West Coast cities like San Francisco, Seattle, and Portland also rank among the top 15.

The top five cities, including New York City, have a home price-to-income ratio more than double the national average of 4.7, making them highly unaffordable. Despite having some of the highest median household incomes in the country, cities like San Francisco, San Jose, and Seattle also have some of the most expensive house prices in the country.

Conversely, the Midwest and parts of the South have much lower ratios, including Detroit (1.9), Cleveland (2.1), and Memphis (3.1). Midwest cities consistently rank among the most affordable for housing and cost of living.

Understanding the U.S. Housing Market

For a deeper understanding of the U.S. housing market, consider examining the 10 fastest-growing housing markets in the U.S., based on their housing stock growth between 2013 and 2022.

Bottom Line

Homeownership remains a significant financial hurdle for many Americans, especially in coastal cities with high home price-to-income ratios. Despite high median incomes, the cost of housing in these areas often outpaces earnings, creating a challenging environment for potential homeowners. In contrast, Midwest and southern cities offer more affordable housing options. What are your thoughts on this housing affordability issue? Feel free to share this article with your friends and discuss. You can also sign up for the Daily Briefing, which is delivered every day at 6pm.