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47 Least Affordable U.S. Housing Markets

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RealtyTrac recently analyzed the affordability of renting and buying in 1,586 U.S. counties and found a surprising number of Americans living in markets that are unaffordable by traditional standards.

The good news is that buying and renting are affordable for median income earners in the majority of counties across the country. We considered a market affordable if the monthly cost of rent or mortgage payment represented less than 30 percent of monthly household income for median income earners.

Fair market rents (as provided by HUD) for three-bedroom homes are below that 30 percent threshold in 1,264 of the 1,586 counties, while mortgage payments for a median priced residential property — including taxes and insurance — are below that 30 percent threshold in 1,508 of the 1,586 counties analyzed.

As these statistics imply, it’s also less expensive to buy than to rent in the majority of markets across the country. In 1,455 out of 1,586 counties (92 percent), the monthly mortgage payment for a median priced home is less than the average monthly fair market rent for a three-bedroom home. You can see the clear buying advantage over renting demonstrated in the heat map below. Click on any county to see the full stats.


The buying advantage is of course assuming the buyer can foot the bill for a 20 percent down payment and has the necessary credit score and debt-to-income ratio to quality for a purchase loan.

There are still 131 counties (8 percent) where it is cheaper to rent than to buy. These include high-priced markets such as New York, Jackson Hole, Wyoming, Park City, Utah, San Francisco, parts of DC, resort areas in Colorado, and other coastal California markets.

The bad news is that the minority of counties where buying or renting is unaffordable represent high density population centers where many Americans live.

Unaffordable for renters
In 322 out of 1,586 U.S. counties that we analyzed, the average monthly fair market rent for a three-bedroom home is more than 30 percent of the monthly median household income — unaffordable by traditional standards. By number these 322 counties represent only 20 percent of the country, but these counties have a combined population of 92 million, 34 percent of the total population of all counties we analyzed.

Bottom line for rent affordability: one out of three Americans live in markets where average rents are unaffordable for median income earners.

Unaffordable for buyers
In 78 out of the 1,586 counties, the average monthly mortgage payment for a median-priced residential property is more than 30 percent of the monthly income for a median-income household — unaffordable by traditional standards. These 78 counties have a combined population of 41 million, 15 percent of the total population of all counties we analyzed.

Bottom line for home purchase affordability: 15 percent of Americans live in markets where median home prices are unaffordable for median income earners.

Unaffordable for both renters and buyers
Finally, in 47 out of the 1,586 counties, both the average monthly mortgage payment for a median-priced home and the average monthly fair market rent for a three-bedroom home are more than 30 percent of the monthly income for a median-income household. These 47 counties have a combined population of 35 million, 13 percent of the total population of all counties we analyzed.

Bottom line for rent and buy affordability: One in every 8 Americans live in markets where both average rents and median home prices are unaffordable for median income earners.

Methodology
For the Median Sales Price we used the median sales price for January 2014 except in states where the sales prices is not required to be disclosed on the sales deeds. In those non-disclosure states we used the median list price for January 2014.

To calculate the estimated mortgage payment we assumed a 20 percent down payment, 30 year term and amortization period, 4.4 percent mortgage rate which was the average mortgage rate from Freddie Mac in March. We also added annual insurance cost of 0.35 percent of the home price and annual property tax of 1.04% of the home price to the mortgage payment.

The rental rates we used were the average fair market rent on three-bedroom home for 2014 from the U.S. Department of Housing and Urban Development. A total of 1,586 counties had sufficient data for the analysis.

Unemployment Rate was the December 2013 unemployment rate that was released by the US Bureau of Labor Statistics.

The Foreclosure Annual Percent Change covers the difference in the number of foreclosures between Q1 2014 and Q1 2013.

Building Permits Annual Percent Change is from HUD and these are preliminary numbers that cover the time periods Q2 2011 to Q1 2012 and Q1 2012 to Q1 2013. The final HUD numbers for Q1 2013 will be released in the middle of May. 

Median household Income for 2014 was an estimate based upon average percentage change of median household income from 2006 to 2012. For counties where median household income was not available for 2005-2008, used only average percentage change for years available


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