Miami once again topped the list of least affordable U.S. real estate markets in July, ahead of Los Angeles and New York, according to RealtyHop.
Even though Miami’s median home price fell slightly in July from June to $600,000, the city remained the least affordable based on a projected median household income of around $45,000. This means that an average family would have to set aside 86% of their annual income to afford a home.
During a visit to a new affordable housing complex last month, HUD Secretary Marcia Fudge called Miami “the epicenter of the housing crisis in this country.” Record rents and high occupancy rates have been fueled in part by out-of-state migration to Miami.
Traditionally, homeowners and renters shouldn’t spend more than 30% of their income on housing, although that’s unrealistic for the majority of Americans. Overall housing affordability fell to a 15-year low in May, according to a June Zillow report.
Hialeah, which is in Miami-Dade County and northwest of the city of Miami, is making its way onto RealtyHop’s list. The city ranked fifth in affordability, with a median asking price for a home of $449,000 in July and a projected median household income of just over $40,000. A family in Hialeah should spend about 70% of their annual income on home ownership costs.
The July Affordability Index factors in rising interest rates and assumes buyers are financing their purchases with 30-year fixed rate mortgages with interest rates of 5.5%. It examines the 100 most populous cities.
Los Angeles has moved into the second least affordable housing market for buyers, based on a median asking price of $969,000, forcing buyers to spend about 85% of their annual income on homeownership costs.
New York fell to No. 3 on RealtyHop’s index. New Yorkers are also expected to spend about 85% of their median annual income of around $68,000 to buy a home. The median asking price for homes fell to $949,000 in July.
Newark was the fourth least affordable city in the nation, where the median home price fell to $380,000. A Newark family earning the projected median income of about $39,000 would need to contribute about 76% of that income toward mortgage payments and property taxes.