Despite historically low interest rates, home prices are rising faster than incomes, making home purchases unaffordable for many Americans.
A median-income household can afford a median-priced home in just 10 of the 25 largest metro areas in the country, according to a new analysis by Interest.com, a personal finance site. Minneapolis was the most affordable housing market in the country, with median-income families there earning 23 percent more than they would need to purchase a median priced home. Atlanta was the second most affordable city, followed by St. Louis and Detroit.
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The least affordable area was San Francisco: Median-income families there make 46 percent less than what’s needed to buy a median-priced home. There are two other California cities – Los Angeles and San Diego – on the list of the five least affordable metros, along with Miami and New York.
“Low mortgage rates are helping home affordability to some extent, but the key ingredient—which has been missing to this point—is substantial income growth,” Interest.com managing editor Mike Sante said in a statement. “Millennials, in particular, are struggling to overcome their student loans and save enough money for a down payment.”
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The findings are slightly more positive than they were last year, when just 8 of the country’s top 25 cities had affordable housing for median-income families.
Baltimore was the biggest gainer on the list, ranking as the sixth most affordable city in 2014, compared to the 17th most affordable last year.
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