Owning a home is becoming an increasingly unaffordable proposition in many of the largest metropolitan areas across the U.S.
In more than half of the nation’s 35 largest markets, buying a typical home listed for sale now requires a greater share of income than the median-valued home entailed historically, according to a new report from real estate website Zillow. Californians have it worst when it comes to home loan affordability. Mortgage payments as a share of income are higher in Los Angeles than in any other major city — for a typical property, these payments would eat up 46.8% of the median income. Historically, loan payments only represented 35.2% of median incomes for owners in the City of Angels.
Not far behind are San Francisco and San Jose, where mortgage payments represent 40.2% and 39.3% of median income respectively. Meanwhile, at the other end of the spectrum, home owners in the Midwest and Rust Belt states must devote a far smaller share of their income to mortgage payments. In St. Louis, Pittsburgh and Cleveland, loan payments represent roughly 13% of median income.
Nationally, homeowners must spend a fifth of their income in mortgage payments for the typical home on average — roughly in line with historical levels. But things could soon get worse, said Zillow chief economist Svenja Gudell.