Homebuyers Are Seriously Stretching Their Budgets to Buy Housing in These Cities
The cost of homeownership has been on the rise in recent years, leading many homeowners to spend more than the recommended 30% of their household income on housing costs. According to a study by 24/7 Wall St., 13.9% of housing units nationwide are spending at least 50% of their income on housing costs. However, this proportion is much higher in more expensive cities.
Top 25 Cities Where Homeowners Are Stretching Their Budgets
To determine where homeowners are stretching their budgets the farthest to buy housing, 24/7 Wall St. analyzed five-year data on housing costs and income from the U.S. Census Bureau’s 2023 American Community Survey. The following cities rank among the top 25 where homeowners are spending more than half of their income on housing:
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Anaheim, CA
All housing units spending more than 50% of income on housing: 23.1%
Homeowners spending more than 50% of income on housing: 13.7%
Median household income: $90,583
Median home value: $771,700
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Elizabeth, NJ
All housing units spending more than 50% of income on housing: 23.1%
Homeowners spending more than 50% of income on housing: 16.0%
Median household income: $63,874
Median home value: $393,500
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Pompano Beach, FL
All housing units spending more than 50% of income on housing: 23.2%
Homeowners spending more than 50% of income on housing: 14.0%
Median household income: $63,832
Median home value: $321,900
While housing costs as a share of income are correlated with renter rates and the overall cost of real estate, the list of the top 25 cities is not just a list of the 25 most expensive cities.
Impact on Individuals
For individuals, spending more than half of their income on housing can lead to financial stress and make it difficult to save for retirement or other goals. It can also limit their ability to handle unexpected expenses, such as car repairs or medical bills.
Impact on the World
On a larger scale, the trend of homeowners spending more than half of their income on housing can have ripple effects on the economy. It can lead to increased demand for housing, driving up prices and making it more difficult for first-time homebuyers to enter the market. It can also contribute to income inequality, as those with lower incomes are disproportionately affected by rising housing costs.
Conclusion
The rising cost of homeownership is a significant challenge for many homeowners, particularly in more expensive cities. Spending more than half of their income on housing can lead to financial stress and limit their ability to save for the future. On a larger scale, it can contribute to income inequality and make it more difficult for first-time homebuyers to enter the market. It is important for individuals to carefully consider their budgets and housing costs before making a purchase, and for policymakers to address the root causes of rising housing costs to make homeownership more accessible and affordable for all.
Sources:
- 24/7 Wall St. (“Where Homeowners Are Stretching Their Budgets the Farthest to Buy Housing,” March 22, 2023)
- U.S. Census Bureau (“American Community Survey,” accessed March 25, 2023)
