It’s Harder to Buy a Home in These 10 Cities

August 17, 2018 by Marty Orefice | Real Estate, Rent to Own

In these areas, the median income and median cost of homes don't add up.

Cost-burdened homes are homes where families struggle to afford basic necessities after paying the cost of housing. The percentage of families that are burdened in an area is determined by analyzing what percentage of families are spending more than 30 percent of their income on housing.

USA Today published a ranking of the cities where the largest percentages of Americans are considered cost burdened based on Harvard’s annual report, “The State of the Nation’s Housing 2018.”

If purchasing a home seems unattainable for you, you might just be looking in the wrong city! However, if you're sure you're in the right place, rent to own could be a good way to get yourself closer to purchasing a home you can afford and keeping yourself out of cost burden.

1. The Los Angeles, Long Beach, Anaheim area

Almost half of the households in this area of California are cost burdened, 46.7 percent. That’s a large percentage of the population, but an even larger percentage of low-income families are cost burdened, 74.6 percent.

The median household income in this area is $65,000, yet the median cost of a single-family home is $631,007. At a 4.35 percent interest rate over 30 years, the median mortgage will really cost $1.13 million, according to the Bankrate Mortgage Calculator. The average family would need to pay more than half their income each month in order to keep up with mortgage payments.

The high cost of home ownership has led to less than half the population having the ability to purchase a home. Only 47.4 percent of people in this area own homes.

2. The Miami, Fort Lauderdale, West Palm Beach area

In the South Florida area, 45.7 percent of families are cost burdened and 66.1 percent of low-income households are cost burdened. A much larger percentage of people are able to own homes than those in the South California area. Fifty-eight percent of people in this metro-area own homes.

The median single-family home is valued at $263,000, and the median household income is $50,100. The total cost over 30 years for the median house once you factor in interest is $471,886.

3. The San Diego, Carlsbad area

This South California area has a 52.1 percent home ownership rate. More than 40 percent of households (43.2 percent) and 71.3 percent of low-income households are cost burdened.

The median cost of a property in the area is $570,000 and the median family income is $70,000. Over the cost of 30 years, the mortgage with interest will cost $1.02 million. The median income family would need to contribute almost 50 percent of their income to their mortgage payments each month in order to afford a mortgage on the median home.

4. The New York, Newark, Jersey City area

Forty-three percent of the households and 72.4 percent of low-income families in New York, New Jersey and Pennsylvania are cost burdened.

The median family income in the area is $71,000 and the median cost of a home is $420,000 . Families in the area have to spend 35 percent of their income to make the monthly mortgage payment. The 30-year mortgage for the median home would cost $752,691 with interest.

5. Riverside, San Bernardino, Ontario area

Sixty-three percent of low-income families and 42.9 percent of all households in this area of California are cost burdened. Median home prices are $349,689 and median single-family household incomes are $56,800.

The cost of the median home with interest after a 30-year mortgage is $626,685. Families have to spend about 36 percent of their income on housing payments.

6. Fresno, California

The median cost of a home in Fresno is $235,570, which comes out to $423,620 over the course of a 30 year mortgage once interest is considered. The median family income is $48,600, meaning the median family can afford to pay $437,400 for a home. The median family in Fresno isn't cost burdened.

Nonetheless, 42 percent of all families and 52.1 percent of low-income families in Fresno are cost burdened. The homeownership rate in Fresno is 52.9 percent.

7. Oxnard, Thousand Oaks, Ventura area

These cities are near the Los Angeles area. The median income for people who live here is $78,000. The median cost of a home is $578,148 – that amounts to a whopping 1.04 million after a 30 year mortgage with a standard interest rate.

Yet, families paying more than $702,000 for a home are cost burdened. Forty percent of families in this area are cost burdened, but more significantly, 73.3 percent of low-income families are cost burdened. The homeownership rate is 62.1 percent

8. Urban Honolulu, Hawaii

According to Hawaii News Now, the median cost of a home in May 2018 was $778,000. After a 30 year mortgage with a standard interest rate, families end up paying $1.4 million for that home. However, the median family can only afford to pay $708,000 for a home because median household income is $78,800.

As a result, 40.3 percent of all households and 68.8 percent of low-income households are cost burdened. The homeownership rate is 54.1 percent.

9. Bridgeport, Stamford, Norwalk area

The median single-family home in this area of Connecticut costs $323,589. A family paying a mortgage actually pays $581,902 for that home. The median household income for the area is $89,700, which means they can afford to pay $807,300 for a home over the course of 30 years.

Thus, a much smaller percentage of residents in this area are cost burdened than those mentioned in previous sections – 38.9 percent. The reason this area makes the list is that there is a strong divide between income levels in the area. More than 75 percent of low-income families in the area are cost burdened.

In this area, 65.3 percent of people own homes.

10. Bakersfield, California

Fifty-seven percent of people in Bakersfield own homes. The median home in the area has a value of $204,670. Over the course of 30 years, a family would put forth $368,053 toward paying off the property with interest.

The median income in the area is $50,000. Therefore, the median family can afford to pay a mortgage worth $450,000 over the course of 30 years. That means that the median home is affordable to the median family.

Nonetheless, 38.8 percent of all families and 44.5 percent of low-income families in Bakersfield are cost burdened.

A Pocket Neighborhood in Langley, Washington by JtMorgan is licensed under CC BY-SA 4.0.

Marty Orefice

About The Author

Marty Orefice

Martin Orefice is a real estate investor who has been in the industry for over a decade. He has experience with rent to own deals from all sides—as a buyer, seller and investor. He created RentToOwnLabs.com to provide the #1 resource where people can find information about all things rent to own.

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