An article in the November issue of Governing titled “As Affordable Housing Shrinks, Where Can Families Live?” reports on the availability of affordable homes for families in the twenty-five largest U.S. cities. In the ten most expensive cities, an average of 17% of homes on the market have three or more bedrooms and are affordable for ownership by a median income family. And more than half of renter households of all income levels in the twenty-five largest cities are cost burdened, spending more than 30% of their income on rent.
The affordability of homes for ownership was based on families spending no more than 30 percent of their income on monthly mortgage payments for a 30-year fixed-rate mortgage and on property taxes, utilities and property insurance, assuming a 20% down payment. The cities with the lowest share of homes on the market that have three or more bedrooms and that a median income family could afford to own were New York (0%), San Francisco (6%), Los Angeles (8%), San Diego (13%), Boston (17%), Seattle (18%) and San Jose (19%). Families earning less than 75% of the area median income face even greater challenges finding homes they could own. The cities with the lowest share of homes on the market that have three or more bedrooms and that these families could afford to own are New York (0%), San Francisco (2%), Los Angeles (3%), San Diego (5%), Seattle (5%), Boston (6%), and Austin (7%). It is almost certain that the true affordability rates are actually lower than these percentages since many families in these income categories would not have sufficient savings for the assumed 20% down payment.
Because owning a home is increasingly out of reach for families with median incomes and less, the demand for rental housing increases, but the development of new affordable rental units has not kept pace. An average of 52.4% of renter households of all income levels in the twenty-five largest cities are cost burdened, spending more than 30% of their income on rent. Detroit had the highest percentage of cost burdened renter households, at 65.3%. Other cities with extremely high percentages of cost burdened renter families include Nashville (52.7%), Chicago (53.2%), San Jose (53.8%), San Diego (54.7%), Indianapolis (54.9%), New York (55.1%), Philadelphia (57.5%), Jacksonville (59.2%), Memphis (59.6%), and Los Angeles (61.8%).
Data for the article came from the 2014 American Community Survey, Trulia, and Axiometrics, a real estate data company.