According to the U.S. Department of Housing and Urban Development, families that pay more than 30% of their incomes on housing are considered cost burdened and may have difficulty affording rent as well as other necessities such as food, clothing, transportation, and medical care. While the poorest families are the most likely to be housing-cost burdened, skyrocketing home prices in U.S. metropolitan areas have caused the nation’s housing affordability crisis to spread to a large number of middle class Americans.
While the housing cost burden for low-income households is often offset through housing subsidies, there are few forces protecting middle-income households from the rising cost of real estate. Fast-growing cities with high construction costs and low housing inventories have experienced some of the sharpest spikes in home prices over the past several decades, and today these cities have some of the largest shares of cost-burdened middle-class households.
To determine the cities where the middle class can no longer afford a home, 24/7 Wall St. reviewed the share of households earning $45,000 to $74,999 annually that spend at least 30% of their incomes on housing in the 100 largest U.S. metropolitan areas. Data came from “The State of the Nation’s Housing 2018” report of the Joint Center for Housing Studies of Harvard University. There are 20 metro areas in which more than 30% of households in the income bracket spend at least 30% of their incomes on housing.
Definitions of the middle class vary by housing organization and geography. Nationwide, the middle 20% of U.S. households earn between $45,325 and $72,384, roughly in line with the $45,000-$74,999 breakout provided by the JCHS. While the incomes earned by the middle class of earners varies by city to city, the $45,000-$74,999 range was used throughout this analysis as an approximation of the American middle class.
20. Stockton-Lodi, CA
> Cost-burdened middle-class households: 30.2%
> Median single-family home value: $347,675
> Median household income: $59,518
> Homeownership rate: 54.1%
Over the past two decades, rising home prices in the Stockton-Lodi metro area have led to increased housing cost burdens for the middle class. The median home value in Stockton rose by 28.2%, from $271,104 in 2000 to $347,675 in 2017, a larger increase than in the majority of U.S. metro areas. Today, some 30.2% of households earning between $45,000 and $74,999 — the middle income quintile nationwide — in the metro area spend at least 30% of their incomes on housing, more than the 22.0% of households in this income bracket nationwide and one of the largest shares of any U.S. metro area.
19. Austin-Round Rock, TX
> Cost-burdened middle-class households: 30.7%
> Median single-family home value: $287,325
> Median household income: $71,000
> Homeownership rate: 57.6%
Austin-Round Rock is one of 20 major metro areas where more than 30% of middle-income households — those earning $45,000 to $74,999 annually — are housing-cost burdened. Unlike the vast majority of U.S. metro areas, housing costs are higher today in Austin than they were 10 years ago. Nationwide, the cost of a monthly mortgage payment on a typical home is 18.1% lower today than it was a decade ago. Meanwhile, in Austin, the median monthly mortgage payment is 14.4% higher than it was 10 years ago.
As is the case nationwide, renters in Austin are more likely to struggle to afford housing than homeowners. Some 47.1% of renters across all income levels in Austin are housing-cost burdened as of 2016, compared to 22.2% of homeowners.
18. Baltimore-Columbia-Towson, MD
> Cost-burdened middle-class households: 33.7%
> Median single-family home value: $258,343
> Median household income: $76,788
> Homeownership rate: 65.3%
Just over one in every three households with annual earnings between $45,000 and $74,999 in the Baltimore metro area are housing-cost burdened. Some 6.3% of households in the same income range are severely burdened — spending over half of their income on housing. For reference, 3.9% of middle-class households nationwide spend over half of their income on housing. Property values are climbing rapidly in the Baltimore metro area. The median home price was 40% higher at the end of 2017 than it was at the end of 2000, a greater increase than in the vast majority of U.S. metro areas.
While Baltimore suffers from an apparent shortage of middle-market housing options, there is an even more limited supply of affordable housing for low-income residents. Some 57.5% of metro area households earning between $30,000 and $44,999 are housing-cost burdened, well above the 42.6% comparable share nationwide.
17. Portland-Vancouver-Hillsboro, OR-WA
> Cost-burdened middle-class households: 33.9%
> Median single-family home value: $379,891
> Median household income: $68,676
> Homeownership rate: 61.7%
Rapid population growth in the Portland-Vancouver-HIllsboro metro area over the past several years has led to higher home prices, which made the city far less affordable for a number of middle class residents. The population of Portland grew by 7.2% from 2011 to 2016, nearly twice the 3.7% national growth rate for the same period. The median home value in the metro rose 65.6% from $229,404 in 2000 to $379,891 in 2017, the largest percentage increase of any U.S. city.
Today, some 33.9% of households earning between $45,000 and $74,999 a year in the Portland metro area spend at least 30% of their incomes on housing, far more than the 22.0% of middle-income households nationwide who are housing-cost burdened and one of the largest shares in the country.
16. Sacramento–Roseville–Arden-Arcade, CA
> Cost-burdened middle-class households: 33.9%
> Median single-family home value: $391,391
> Median household income: $64,052
> Homeownership rate: 59.1%
Housing costs have climbed far faster than incomes in the Sacramento metro area in recent years. Half a decade ago the price of a typical area home was 3.1 times greater than the area’s median income. Today a typical home in Sacramento costs 5.2 times the median income, nearly the highest price-income ratio of any metro area. Partially as a result, some 33.9% of households earning between $45,000 and $74,999 are burdened by housing costs, well above the 22.0% of middle-income households nationwide. Meanwhile, just 7.4% of households earning at least $75,000 in Sacramento are housing-cost burdened, only slightly more than the comparable 6.2% national share.