Average Family Cannot Afford to Buy a Home in 13 Major US Cities
The American Dream is further out of reach for many people than we thought. There are now 13 major U.S. cities where a family with an average household income cannot afford to buy a home, data crunched by HSH.com indicates.
The average household income in the United States was $51,759 in 2013, according to the U.S. Census Bureau, which puts purchasing a home beyond the residents of cities as diverse as Baltimore, Chicago, Sacramento, and Denver. HSH determined that the amount of income needed to buy the average home in those cities exceeds that figure.
The numbers HSH reported are truly disturbing because they show home ownership is now beyond the reach of people in most of our largest cities. The working poor and, increasingly, the middle class are being squeezed out of such areas.
Average Americans Can No Longer Afford to Buy a Home in Most of the Largest US Metro Areas
The highlights of HSH’s numbers include:
- The cost of the average home in San Francisco ($742,900) is more than 10 times the median income. The average family would need to earn $142,448.33 a year and meet a mortgage payment of $3,323.79 a month to buy a home in the city by the Bay.
- A family would need to earn $58,431.48 a year to be able to afford the average home in Miami, which costs around $265,000. The median income in the Miami–Fort Lauderdale metropolitan area is $46,946 a year. Miami actually has the second lowest income of the 25 largest metro areas in America, according to New Times.
- A family would need to earn around $60,603.50 a year to be able to buy the average home in Portland, Oregon, which costs around $288,900. The median household income in Portland is $50,271 a year.
- Sky high housing prices are spreading to some cities normally thought of as poor or middle class. The average family would need to earn around $52,551.96 a year to buy a home in Baltimore, where the average housing price is $233,200 and where the median household income was $41,385 in 2013. The average family would need to earn around $58,412.29 to be able to buy a home in Sacramento, California. The median household income in Sacramento was $49,753 a year, according to the U.S. Census Bureau.
- The average family is now priced out of the housing market in the following American cities:
- Portland, Oregon
- Washington, D.C.
- New York City
- San Diego
- Los Angeles
- San Francisco
- It is now impossible for the average household to afford to buy the average home in more than half of the 27 largest cities in the United States.
These figures are particularly disturbing because the median income in 81% of the counties in the United States is still lower than it was in 1999 when adjusted for inflation, The Washington Post reported. This includes such communities as Chicago, where incomes peaked at $69,949 in 1969.
Housing prices no longer have any relation to economic realities in much of the United States. These prices are making income inequality worse by driving people out of certain areas of the country.
Working Class Flees California
Around 247,515 more people moved out of California than moved into the Golden State between 2007 and 2013, The Los Angeles Times estimated. Nearly three quarters of those that moved out of the state made less than $50,000 a year. The major destinations for those leaving California are states with lower housing costs, such as Arizona, Nevada, and Texas. Around 82,154 Californians have migrated to Texas alone in the past six years.
The reason for the migration out of the state is high housing costs, The Times reported.
“It’s getting harder and harder for the middle-class Californian to buy a home,” Jordan Levine, the director of economic research at Beacon Economics, told The Times. “People just keep looking for ways to maximize that residential dollar. That attracts people to inland areas of the state and to other states.”
One has to wonder how major cities like Los Angeles and Chicago can survive with just the very rich and the very poor. That sounds more like a third world country than the United States of America. It also sounds like a recipe for social and political unrest.
The political, social, and other ramifications of the high cost of housing are disturbing. Many Americans can no longer afford to live where the jobs are; that will make poverty and income inequality worse. It’ll also set the stage for some very nasty class warfare if something is not done.
Perhaps leaders in states like California and Illinois should take a look at states like Texas if they want somebody to fix their toilets, mow their lawns, teach their kids, and man their police forces. If they don’t, they might find themselves with no choice but to pay plumbers $300 an hour and police officers $500,000 a year. Since I seriously doubt taxpayers will stand for that, some sort of crash is coming.