Housing Market 2023: A recent report by Redfin examining the least and most affordable cities in the United States reveals that homeownership is more expensive than ever before.
The report indicates that in 2023, an individual earning the median income in the United States of $78,642 would have been required to allocate 41.4% of their earnings towards monthly mortgage payments on a home priced at $408,806 in the country.
The current proportion stands at its highest level ever, reflecting growth from 38.7% in 2022. As a point of reference, numerous experts in personal finance advise adhering to the 28% rule: housing expenses should not exceed 28% of your total monthly income.
The least and most affordable cities in the United States are outlined below, along with a realtor’s prediction of where housing prices may increase in 2024.
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5 Least Affordable Cities
Here are the five least affordable cities in 2023, according to the Redfin report.
Anaheim, California
- Share of income spent on monthly housing costs: 88.3%
- Median monthly housing payment for homebuyers: $6,794
- Median estimated household income: $92,306
- Median home sale price: $1,022,075
- Change in median home sale price from 2022–2023: 3.1%
San Francisco, California
- Share of income spent on monthly housing costs: 85.4%
- Median monthly housing payment for homebuyers: $9.597
- Median estimated household income: $134,815
- Median home sale price: $1,444,700
- Change in median home sale price from 2022–2023: -3.5%
San Jose, California
- Share of income spent on monthly housing costs: 73.0%
- Median monthly housing payment for homebuyers: $9,528
- Median estimated household income: $156,643
- Median home sale price: $1,433,625
- Change in median home sale price from 2022-2023: 0.7%
Los Angeles, California
- Share of income spent on monthly housing costs: 72.9%
- Median monthly housing payment for homebuyers: $5,611
- Median estimated household income: $92,306
- Median home sale price: $844,500
- Change in median home sale price from 2022-2023: –1.0%
San Diego, California
- Share of income spent on monthly housing costs: 64.6%
- Median monthly housing payment for homebuyers: $5,604
- Median estimated household income: $104,072
- Median home sale price: $843,450
- Change in median home sale price from 2022-2023: 3.2%
5 Most Affordable Cities
Here are the most affordable cities, according to the report. All five have lower median home sale prices than anywhere else in the U.S. and, at less than $300,000, they are also much lower than the $408,806 median-priced U.S. home.
Detroit, Michigan
- Share of income spent on monthly housing costs: 18.5%
- Median monthly housing payment for homebuyers: $1,155
- Median estimated household income: $74,971
- Median home sale price: $173,785
- Change in median home sale price from 2022-2023: -2.6%
Pittsburgh, Pennsylvania
- Share of income spent on monthly housing costs: 23.5%
- Median monthly housing payment for homebuyers: $1,456
- Median estimated household income: $74,279
- Median home sale price: $218,973
- Change in median home sale price from 2022-2023: 1.5%
Cleveland, Ohio
- Share of income spent on monthly housing costs: 23.8%
- Median monthly housing payment for homebuyers: $1,362
- Median estimated household income: $68,588
- Median home sale price: $204,773
- Change in median home sale price from 2022-2023: 2.4%
Philadelphia, Pennsylvania
- Share of income spent on monthly housing costs: 23.9%
- Median monthly housing payment for homebuyers: $1,761
- Median estimated household income: $88,497
- Median home sale price: $265,100
- Change in median home sale price from 2022-2023: -1.0%
St. Louis, Missouri
- Share of income spent on monthly housing costs: 25.2%
- Median monthly housing payment for homebuyers: $1,647
- Median estimated household income: $78,407
- Median home sale price: $247,852
- Change in median home sale price from 2022-2023: 4.1%
In which areas could housing become more affordable by 2024?
Joy Aumann, co-founder of La Jolla Life and a licensed realtor (CIPS), concurs with Redfin’s classification of St. Louis, Detroit, Pittsburgh, Cleveland, and Pittsburgh as the most affordable housing markets.
“Having experience selling multimillion-dollar homes in Los Angeles, I can attest that median prices below $300,000 are extremely affordable,” she stated. “These already budget-friendly cities will become even more affordable in 2024, as mortgage rates decline and more homes enter the market,” according to my professional assessment. “Purchasers in these Midwestern regions should experience the greatest gains.”
Aumann stated that Pittsburgh and Cleveland stand out to her specifically as markets poised to experience increased affordability. “Strong local economies are attracting new residents, but aging housing stock and declining populations in cities like Detroit and St. Louis are limiting price increases,” she added.
Aumann proposed that purchasers who have grown weary of the exorbitant costs in Southern California should consider investing in these underappreciated communities in the Midwest for 2024. It sounds great to be able to reduce monthly expenses by taking advantage of reduced rates and increased options.
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