By Molly Schiff -
CNBC
The real estate market seems to be experiencing a certain cooling.
But that doesn't mean houses are getting more affordable in every city.
According to an affordability report from RealtyHop, a real estate data company, many cities in the United States are still hard to afford.
In 42 of the 100 cities included in the report, the average American would have to spend
at least 40% of their income on owning a home.
The report took into account median family income, median home prices, local property taxes and mortgage costs.
Results are based on a 30-year mortgage, 5.5% interest rate, and a
20%
downpayment .
These are the 12 least affordable housing markets in the United States, as well as the median household income, the median home price, and the percentage of income required to afford a property in each city.
1. Miami, Florida
Median Family Income
: $44,581
Median Home Price:
$610,000
Percentage needed to pay for housing:
87.39%
2. Los Angeles, Calif.
Median family income:
$69,695
Median Home Price:
$975,000
Percentage needed to pay for housing:
85.34%
Rents in the US continue to rise, causing many to adjust family finances
Aug. 14, 202201:59
3. New York, New York
Median Family Income:
$68,129
Median Home Price:
$925,000
Percentage needed to pay for housing:
82.47%
4.Newark, NJ
Median family income:
$38,854
Median Home Price:
$385,000
Percentage needed to pay for housing:
77.52%
5. Hialeah, Fla.
Median family income:
$40,036
Median Home Price:
$465,000
Percentage needed to pay for housing:
72.55%
6. Long Beach, Calif.
Median family income:
$70,677
Median Home Price:
$799,000
Percentage needed to pay for housing:
69.77%
California allows a 10% increase in rents.
These are the people who can be affected
Aug. 2, 202201:33
7. San Francisco, Calif.
Median family income:
$126,117
Median Home Price:
$1,388,000
Percentage needed to pay for housing:
66.56%
8. San Diego, Calif.
Median Family Income:
$89,357
Median Home Price:
$950,000
Percentage needed to pay for housing:
65.65%
9. Anaheim, Calif.
Median family income:
$80,486
Median Home Price:
$834,250
Percentage needed to pay for housing:
63.98%
10. Santa Ana, Calif.
Median family income:
$74,185
Median Home Price:
$750,000
Percentage needed to pay for housing:
62.14%
11.Oakland, Calif.
Median family income:
$82,649
Median Home Price:
$798,000
Percentage needed to pay for housing:
60.85%
Miami is the worst city to rent and is forcing families to the extreme: "My mom feels super sad"
July 13, 202202:04
12. Boston, Mass.
Median Family Income:
$79,797
Median Home Price:
$775,000
Percentage needed to pay for housing:
59.38%
To own a home, an average family living in Miami, Los Angeles, or New York would have to spend more than 80% of their annual income on housing.
The remaining 20% would have to be enough to cover all other expenses, which is probably unsustainable.
CNBC finance expert Kevin O'Leary advises aspiring homeowners to follow the ⅓ rule when buying:
Only ⅓ of your after-tax income should go toward paying the roof
.
Anyone entering the average salary in the above cities would be breaking that rule.
In order to comply with the rule, "the person may have to live in a smaller apartment if it's a rental, or buy a smaller house," O'Leary told CNBC.
O'Leary's rule is similar to advice the US government first gave in 1981: spend no more than 30% of your income on housing, including mortgage interest, property taxes and house keeping.