The 10 Most Affordable Middle-Class Home Markets
ThinkstockRising home prices, higher interest rates and low inventories have conspired recently to reduce the ability of middle-class Americans to buy a home. In some markets, middle-class buyers may be effectively shut out, while in others home prices are much…
Rising home prices, higher interest rates and low inventories have conspired recently to reduce the ability of middle-class Americans to buy a home. In some markets, middle-class buyers may be effectively shut out, while in others home prices are much more affordable.
Online real-estate site Trulia has calculated housing affordability in 100 metropolitan areas by comparing median income in each metro area with the cost of owning a home. Housing affordability is calculated for based on a total monthly mortgage payment that assumes a 4.4% 30-year fixed-rate mortgage with 20% down, property taxes for that area and insurance. The affordability cutoff is 31% of pretax monthly income, which is the guideline used by the Federal Housing Administration and the Home Affordable Modification Program to determine whether a home is within a potential buyer’s reach. The debt-to-income ratio of 43% used to compute a qualified mortgage includes all a borrower’s debt, not just housing debt.
The 10 most affordable housing markets for middle-income buyers are listed here in order of percentage of homes for sale that are affordable.
- Akron, Ohio: 86% affordable
- Toledo, Ohio: 84%
- Dayton, Ohio: 83%
- Gary, Indiana: 83%
- Columbia, S.C.: 82%
- Columbus, Ohio: 81%
- Detroit, Mich.: 81%
- Cleveland, Ohio: 81%
- Little Rock, Ark.: 81%
- Rochester, N.Y.: 81%
Leading the cities where the fewest homes are affordable for middle-class buyers are San Francisco (14%), Los Angeles (23%), Orange County, Calif. (24%) and New York City (25%).
In Manhattan, only 2.3% of homes for sale are affordable to a middle-class buyer. Frankly, we are surprised that number isn’t zero.
READ MORE: Home Prices Surge in Seven U.S. Cities
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Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.
