Two American urban areas identified as affordable for local home buyers according to a recent study.
In the United States, the housing market has been a source of frustration for many, with buyers often feeling maxed out, frustrated, or giving up due to the current system's inability to cater to the average person. However, some cities stand out as exceptions, offering more affordable housing options. A recent study by Clever Real Estate found that only two U.S. cities, Detroit and Pittsburgh, have median salaries that enable workers to afford a median-priced home among America's 50 highest-population metros.
Detroit: Affordability Amidst Challenges
Detroit, Michigan, offers some of the most affordable homes in the country, thanks to low home prices relative to local incomes, high housing availability, and specific economic and demographic factors. With a median home price of $195,000 and a median household income of $72,574, Detroit has the second-lowest price-to-income ratio nationally, and the median price per square foot is around $87, making many homes affordable and often under six figures.
However, Detroit's affordability is complicated by high poverty (over 30% residents below the poverty line), high unemployment (~7.9%), and infrastructure problems such as abandoned homes and crumbling utilities that increase maintenance costs. Many homeowners are "house rich but cash poor," struggling with additional costs like property taxes, insurance, and repairs, leading to some being uninsured and limiting access to financing.
Pittsburgh: Stable Economy, Good Housing Availability
Pittsburgh, Pennsylvania, ranks 14th in housing availability, providing more options for buyers compared to most metros. The city benefits from a stable economy, a robust job market, and high livability, which supports balanced housing affordability. While prices have increased by about 5.7% year over year in income needed to buy, Pittsburgh remains relatively affordable due to this economic stability and availability.
Iowa: Lower Costs of Living and Housing Prices
Iowa cities typically have lower costs of living and housing prices compared to national averages, contributing to their affordability. Like Detroit and Pittsburgh, many Midwest metros have attracted buyers during recent years due to their overall affordability, with housing supply increasing moderately to accommodate demand.
The Impact of Affordable Housing
The affordability of housing in Detroit, Pittsburgh, and Iowa relative to other major U.S. cities stems from a combination of low home prices relative to local incomes, high housing availability or vacancy rates, and specific economic and demographic factors unique to each region. However, the lower prices in Detroit come with significant challenges like poverty, infrastructure issues, and repair burdens that complicate true affordability beyond purchase price alone.
In contrast, many other major U.S. cities, where high demand, limited supply, and stronger economies drive up home prices far above local income levels, make housing much less affordable. As of mid-June, the national median sales price of houses sold in the U.S. is $416,900, and in 48 of the 50 largest metropolitan areas, a median income can't purchase the median-priced home.
Affordable housing is essential for maintaining a healthy economy and society. Homeownership is one of the primary ways to build equity and generational wealth, but the inability to afford a home deepens the country's wealth gap. The study used a 20% down payment in its calculations, while first-time homebuyers typically put down an average of 9%. The affordability findings are based on the well-known standard of spending no more than 28% of one's gross monthly income on housing costs.
References:
- Detroit Free Press
- Clever Real Estate
- Crain's Detroit Business
- Apartment List
- Pittsburgh Post-Gazette
- Clever Real Estate
- Iowa Real Estate Investor's Association
- Apartment List
- CardRates
- Aspen Institute Financial Security Program
- Detroit and Pittsburgh's affordability, as revealed in the study by Clever Real Estate, is a result of a combination of factors including low home prices relative to local incomes, high housing availability, and specific economic and demographic conditions.
- In Pittsburgh, a stable economy, robust job market, and high livability contribute to its relatively affordable housing compared to other major US cities, despite a recent increase in housing prices.
- Iowa cities often offer lower costs of living and housing prices compared to national averages, making them attractive to many buyers looking for affordability, as observed in various studies and reports such as those from Aspen Institute Financial Security Program and Iowa Real Estate Investor's Association.
