Housing affordability is worst on record, data shows

Housing affordability nationwide is the worst it has ever been on record due to spiking home prices and interest rates, Bloomberg reports.

The crisis has reached areas of the country that once had the most affordable homes, the outlet reported citing data from the Federal Reserve Bank of Atlanta.

In September 2022, a median-income household would have had to spend a little over 46 percent of its income to afford a median-priced home. That’s a 14-point spike from September 2021, when a household had to spend about a third of its income to afford a home in its community. (The data measured affordability based on the ability of a median-income household to absorb the estimated annual costs associated with owning a median-priced home, including mortgage, estimated taxes and the cost of insurance.)

Furthermore, in all but one U.S. metro area with more than 500,000 people, a median-income household would have to spend more than 30 percent of its income to own a median-priced home.

The five least-affordable metro areas in the U.S. are all in California — Los Angeles-Long Beach-Anaheim, San Francisco-Oakland-Hayward, San Jose-Sunnyvale-Santa Clara, Oxnard-Thousand Oaks-Ventura, and San Diego-Carlsbad – and require a median-income household to spend at least 80 percent of its income to afford a median-priced home.

The sixth-least affordable metro area is New York-Newark-Jersey City, which requires a median-income household ($86,000) to spend 66 percent of its income to purchase a median-priced home of $621,000.

While the issues in those areas are well-known, some of the sharpest declines in affordability, according to Bloomberg, have been seen in the Southeast in cities such as Nashville, Atlanta, Tampa and Orlando.

Just one metro area – Toledo, Ohio – rated above the affordability index, according to the data. Rounding out the top-five most affordable metro areas are St. Louis, Mo-IL; Des Moines, Iowa; Scranton-Wilkes Barre-Hazelton, Pa.; and Dayton, Ohio.

Experts are predicting a market correction, where home prices fall more in line with income levels, the outlet reported. But, at this point, inventory of unsold homes hasn’t increased to the point where housing prices will see

“We don’t know necessarily how it’s going to play out,” Domonic Purviance, of the Atlanta Fed, told Bloomberg.

— Ted Glanzer