The least affordable housing markets in America

Derek Miller

The Department of Housing and Urban Development (HUD) recommends spending no more than 30% of your income on housing. But in some cities across the country, people are forking more than half their income over to rent, or buying homes worth 10 times their annual salary. According to HUD's guidelines, these people are housing cost-burdened. Read on as SmartAsset takes a look at these and other affordability ratios to find the least affordable housing markets in America.

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In order to find the least affordable housing markets in America, we looked at data on three different affordability ratios. We looked at rent as a percent of income, average housing costs as a percent of median household income and median home value to median household income. Taken together they cover a range of housing affordability issues. Take a look at our data and methodology section below to see how we created our scores and where we got our data.

Key Findings

  • Triple trouble – Nineteen of the 20 least affordable cities in the country are located in three states: California, New Jersey and Florida. Only Bloomington, Indiana, ranked 14th, stops these three states from taking all 20 spots. California makes up the bulk of the top 20, with 14 cities, while New Jersey has three and Florida has two.

  • Not just rich cities – San Francisco often grabs the headlines for its eye-popping rent numbers. Indeed the average San Francisco renter, according to the Census Bureau, is paying about $1,660 per month. But when you make $92,000 per year in household income (which the average San Francisco household makes), $1,660 doesn't seem so bad. In this study, the least affordable cities are often places where rents have increased but incomes did not rise. In Passaic, New Jersey, for example, renters pay only $500 less than San Francisco renters. However, households in Passaic make almost $70,000 less per year than they do in San Francisco.

Data and Methodology

In order to find the least affordable cities in America, SmartAsset looked at housing data for 584 American cities. We collected data on the following three factors:

  • Rent as a percent of income. This is the percent of income which renters pay on rent. For this metric, the Census caps the number at 50%. In cities where renters pay more than 50% of their income on rent, the Census writes 50+. In cases like this we used 50% as our metric. Data comes from the Census Bureau's 2015 1-Year American Community Survey.

  • Housing cost as a percent of income. This is the percent of income going to rent. We used median housing costs and median household income to find this statistic. Data comes from the Census Bureau's 2015 1-Year American Community Survey.

  • Ratio of median home value to median household income. Median household income and median home value come from the Census Bureau's 2015 1-Year American Community Survey.

We then ranked each city in each metric, giving an equal weighting to each metric. After ranking, we found each city's average ranking. We used this average ranking to create our final score. The city with the best average ranking received a 100. The city with the worst average ranking received a 0.

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