Homeownership is likely to be out of reach for more than half of the households in many large cities, according to a study published by the personal finance resource GoBankingRates on Tuesday.
GoBankingRates used the median home listing price in the 100 biggest cities across the U.S. to figure the monthly mortgage payment. Using the rule of thumb that no more than 30 percent of income should go toward housing, they calculated the income needed to afford a mortgage in those cities and then compared this income to the number of households with income equal to or greater than that amount. Out of the 100 largest cities in the U.S. the study ranked the ones where homeownership was out of reach for more than 50 percent of households.
The study found that six of the top 10 cities with the highest percentage of households that can’t afford a home are in California, due to its high real estate prices. Therefore it comes as no surprise that San Francisco with a median listing price of around $1.19 million and 76.7 percent of households that can’t afford a home topped the list.
San Francisco was followed by Boston, that had a median listing price of $725,000 and 75.7 percent of households that can’t afford a home. Miami (median listing price $450,000; 74.3 percent households), Long Beach California (median listing price $549,000; 73.5 percent households), and Los Angeles (median listing price $749,000; 72.9 percent households) rounded up the Top 5 list.
Ranked No. 10, New Orleans was a surprise entry on the final list with a median home price of $300,000 but with 65.4 percent of households that can’t afford a home because of lower wages.
Other cities that made it to this list include New York; San Jose, California; San Diego; Oakland, California; Dallas; Denver; Washington D.C.; Houston; Seattle; Nashville, Tennessee; and Atlanta.
To read the complete study, click here.