Pittsburgh, Pennsylvania is the most affordable city for buyers looking to purchase their first home, according to a study by the American Enterprise Institute's (AEI's) Center on Housing Markets and Finance [1].
The study ranked the affordability of 50 metropolitan regions in the U.S. for first-time homebuyers by using the ratio of home prices to incomes. The study also factored in the square footage and the price per square foot of living area.
The study found that median first-time homebuyers bought homes that were worth 3.3 times their household income. While the 10 most affordable cities had an average ratio of 2.6, the 10 most expensive ones had an average ratio of 4.3.
The study also revealed that house prices and incomes were higher in the 10 least affordable cities compared with the 10 most affordable ones, even though homes for first-time buyers were similar in size across the country. It also found that while affordability had remained relatively constant in the most affordable metros, it had worsened in the cities that were ranked among the least affordable ones.
With an affordability of 2.3 that has remained unchanged since 2013 and a median home priced at $143,000 against a gross annual income of $60,000, Pittsburgh, Pennsylvania was the most affordable city for first-time homebuyers, according to the study. Cleveland, Ohio, with an affordability of 2.4 and home prices at $134,000 compared with a gross annual income of $56,000 was ranked second, followed by Cincinnati, Ohio (2.6); St. Louis, Montana (2.6); and Columbus, Ohio (2.7) rounding up the top five most affordable cities.
Detroit, Michigan; Milwaukee, Wisconsin; Oklahoma City, Oklahoma; Houston, Texas; and Indianapolis, Indiana were also ranked among the Top 10 most affordable cities.
Six California cities ranked amongst the least affordable metros for first-time buyers in the study. San Jose, California was the least affordable city for homebuyers in the U.S. with an affordability ratio of five which has risen by 0.3 since 2013. Home prices in this metro were pegged at $650,000 against a gross annual income of $126,000. Another California city, Los Angeles was the second least-affordable city in the country. With an affordability ratio that has risen 0.1 points since 2013 to 4.6, homes in LA cost $495,000, while gross annual income is estimated at $103,000. San Francisco (4.6); San Diego (4.5); and Denver, Colorado (4.1) rounded off the five least affordable cities in the U.S. for first-time homebuyers.
Salt Lake City, Utah; Seattle, Washington; Portland, Oregon; Riverside-San Bernandino, California; and Sacramento, California also made it to this list.
Click here [2] to view the full list of metros.