News flash! It costs more to live in certain settings and locations than others.
Buyers of median-valued homes in urban settings can expect to pay an average of 26.5% of their household income on monthly mortgage payments. If those buyers of a median-valued home chose to live in the suburbs, that same home would cost them 20.2% of their household income. In a rural setting, buyers of a median-valued home would pay 13.4% of their household income towards their monthly mortgages.
Renters of median-valued homes can expect to pay an even higher share of their household incomes towards their monthly rents. Urban renters would pay 36.8% of their household incomes towards rents; suburban renters would pay 31.8% of their household incomes and rural renters could expect to pay 23.9% of their household incomes towards monthly rent payments.
True, urban costs are higher and incomes in urban settings are disparate but urban buyers do better than renters when all is said and done because mortgage payments are spread over decades, not months, and buyers continue to be the beneficiaries of still historically low interest rates.
It turns out that home seekers in suburbia are stretched the thinnest in the country’s largest markets. Seventeen of the largest suburban markets pay the largest share of their household incomes to monthly mortgage payments. In 22 of the 35 largest metros, suburban rents pay the largest share of their household income to monthly rental payments.
Buyers in 10 of the 35 largest markets and renters in 9 of the 35 largest markets can expect to spend the most by moving to city centers in those urban markets. Think about Seattle and New York City as two examples of city centers that require buyers to spend 40% of their respective household incomes.
Let’s take a look at the most and least affordable urban, suburban and rural markets in the country.
Most Affordable Share of Household Income
Urban Suburban Rural
City
Indianapolis 6.2% 12.2% 11.3%
Pittsburgh 8.7% 12.8% 12.3%
Kansas City 7.2% 13.6% 13.0%
Cincinnati 9.5% 12.9% 12.9%
St. Louis 10.4% 13.0% 11.9%
Cleveland 6.3% 13.1% 16.9%
Detroit 4.1% 15.7% 18.6%
Columbus 11.4% 14.4% 14.6%
Baltimore 6.0% 17.2% 21.3%
Chicago 15.3% 16.4% 13.4%
Least Affordable Share of Household Income
Urban Suburban Rural
City
San Jose 53.8% 58.2% 23.2%
San Francisco 45% 36% 50.9%
Los Angeles 45% 52% 24%
San Diego 35% 41% 37.3%
Sacramento 40.4% 28.2% 32.5%
Seattle 40.4% 27.4% 24.4%
New York 40.0% 27.4% 21.0%
Denver 26.7% 25.8% 27.8%
Portland 28% 26.2% 24.9%
Boston 28.8% 26.2% 20.0%
