A look at home affordability rankings for U.S. metro areas reveals the extremes of a hot housing market and the best kept secret in housing.
The pandemic-driven work-from-home wave didn’t only make sweatpants and midday naps acceptable. It also presented the unique opportunity for people to live in one place and work in another.
With remote workers no longer tethered to their city of employment, they're free to seek out more desirable areas. Often, that means finding somewhere with affordable housing opportunities.
With this in mind, we looked at the most and least affordable metro areas in the United States. The National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) is the percentage of homes sold in an area that a family earning the local median income could afford.
As a baseline, 63.1% of homes sold in the US from January to March 2021 were affordable to families earning the national median income of $79,000.
The national HOI has been hovering around the 60 percent mark since 2013, even though the median sales price increased over 50% from $210K to $320K in that time.
While the national HOI has been steady for nearly a decade, a closer look at the data shows the extremes we’re seeing in the US housing market.
Let’s take a look at the home affordability rankings:
| Metro area | HOI (% of homes affordable for median income) | Median family income (000s) | Median sales price (000s) | National HOI rank |
|---|---|---|---|---|
| Cumberland, MD-WV | 97.5 | 60.8 | 100 | 1 |
| Fairbanks, AK | 96.3 | 62.5 | 274 | 2 |
| Monroe, MI | 95.9 | 78.6 | 175 | 3 |
| Wheeling, WV-OH | 95.5 | 63.6 | 120 | 4 |
| California-Lexington Park, MD | 95.2 | 116.5 | 300 | 5 |
| Metro area | HOI (% of homes affordable for median income) | Median family income (000s) | Median sales price (000s) | National HOI rank |
|---|---|---|---|---|
| Anaheim-Santa Ana-Irvine, CA* | 18.2 | 104.8 | 825 | 229 |
| San Francisco-Redwood City-South San Francisco, CA* | 17.4 | 143.4 | 1,305 | 230 |
| Corvallis, OR | 15.9 | 93.0 | 390 | 231 |
| Salinas, CA | 15.1 | 80.9 | 725 | 232 |
| Los Angeles-Long Beach-Glendale, CA* | 11.6 | 78.7 | 729 | 233 |
It’s not shocking that California dominates the latter affordability rankings list. Even with higher median family incomes, the median sales prices are astronomical.
Yes, the $1.305 million median sales price for San Francisco-Redwood City-South San Francisco is the highest in the nation. And yes, even with an area median income over $143K only 17.4% of families can afford homes in the area.
For perspective, the median family salary in San Fran is enough to buy 13 homes (each with a nice garden shed) at the median home sales price of $100K in Cumberland, MD-WV.
It also makes sense that Cumberland tops the list of affordable metro areas, since $100K is the lowest median sales price in the country. Even with a median income of just $60K, 97.5% of families in the area can afford a home at the median price.
The lists also revealed a hidden gem in the California-Lexington Park, MD metro area. In terms of housing and income opportunities, this might be the best kept secret in the US.
California-Lexington Park has a median family income of $116.5K -- well above the national average of $79K -- yet its median home sales price is $20K under the national average.
Compared to metro areas with similar median family incomes, housing is dirt cheap.
| Metro Area | Median family income | Median sales price | National HOI rank |
|---|---|---|---|
| California-Lexington Park, MD | 116.5K | 300K | 3 |
| Boulder, CO | 116.9K | 583K | 181 |
| Seattle-Bellevue-Everett, WA | 115.3K | 650K | 209 |
| Santa Cruz-Watsonville, CA | 111.9K | 850K | 224 |
This probably isn’t a groundbreaking insight, but the key to home affordability is finding the right balance between income opportunities and house prices.
For example, the median family incomes of Los Angeles-Long Beach-Glendale, CA ($78.7K) and Monroe, MI ($78.6K) are nearly identical with each other and the national median. Yet in LA, just 11.6% of homes are affordable at that income level. Meanwhile, in Monroe, nearly 96% of homes are within reach.
The difference is staggering, but there are miles of middle ground in between. And with remote work becoming more common, many homebuyers have the freedom to find an area with better housing opportunities for their income level.
Some references sourced within this article have not been prepared by Fairway and are distributed for educational purposes only. The information is not guaranteed to be accurate and may not entirely represent the opinions of Fairway.
