Housing affordability declines sharply; fewer than 30% can afford homes in five major metros

Housing affordability has significantly decreased in recent years, with less than 30% of households in five major metropolitan areas earning enough to purchase a home. According to Realtor.com® research, Los Angeles, Oxnard, San Diego, and San Jose in California, along with New York City, are the most affected.

In Los Angeles, where the median list price is $1,150,000, only 13.2% of households can afford a home. The necessary median household income for buying is $244,692. "A combination of stubbornly high mortgage rates and stubbornly high prices has put homeownership out of reach of a large majority of households along the costly coasts," states Realtor.com senior economist Ralph McLaughlin. He adds that "California and the Northeast, in particular, are places where just a small share of households can afford to buy the median-priced home."

While four markets on this unaffordability list are in California, New York City is the only city from the Northeast included. Here, the required median income to buy a median-priced home is $184,488, and only 28.6% of residents can afford it under the rule that housing costs should not exceed one-third of their income.

California emerges as the least affordable state with Los Angeles at the forefront. Jameson Tyler Drew from Anubis Properties notes losing deals due to clients being priced out over time: “I’ve lost dozens of deals over the last few years because clients were slowly priced out of the market.” He describes those who manage to buy homes as often feeling "house poor" since 2019.

Drew further comments on L.A.'s high cost across all aspects and its limited housing development: “Los Angeles is just too expensive across the board for most homebuyers... To even start to consider a home [here], you have to have an income of almost $250,000 per year." He mentions other high living costs like gas and utilities contributing to affordability issues.

The city's estimated homeless population underscores these challenges: “It’s no wonder that L.A. has an estimated 75,000 homeless people wandering our streets,” Drew remarks. He believes improved city services could alleviate these housing problems.

Affordability remains a challenge across each metro area on this list:

- Los Angeles requires a median household income of $244,692.

- Oxnard lists homes at $999,125 needing an income of $213,722.

- San Diego's median price is $979,200 with an income requirement of $208,436.

- San Jose demands an income level of $292,096 for its $1.394 million homes.

- In New York City, buyers need an income of $184,488 for properties listed at about $762,375.

These figures highlight significant barriers for potential homeowners across these regions.