Homebuying Prospects Are Worsening for the Middle Class

Photo (cc) by Diana Parkhouse

The American dream of owning a house is out of reach for a growing number of middle-class Americans.

A new report from real estate research firm Trulia shows that in the past year, mortgage rates have gone up and home prices have increased faster than incomes across much of the U.S., effectively pricing more people out of the housing market.

In the past year, the number of for-sale homes that are affordable to the middle class has dropped in 98 of the 100 largest metropolitan areas. Jed Kolko, Trulia’s chief economist, said:

More than 4 out of 5 homes for sale in Detroit and Cleveland are within reach of the middle class, compared with 1 out of 4 in New York and Los Angeles and 1 out of 7 in San Francisco. Middle-class affordability is worsening in expensive markets and won’t improve long-term without more construction.

A home is considered affordable by Trulia if its monthly costs (after a 20 percent down payment) – including mortgage, insurance and property taxes – are less than 31 percent of a region’s median household income.

The top five most and least affordable housing markets for the middle class, including the percentage of for-sale homes that middle-class Americans can afford to purchase, are as follows:

Most affordable

  1. Akron, Ohio – 86 percent.
  2. Toledo, Ohio – 84 percent.
  3. Dayton, Ohio – 83 percent.
  4. Gary, Ind. – 83 percent.
  5. Columbia, S.C. – 82 percent.

Least affordable

  1. San Francisco – 14 percent.
  2. Los Angeles – 23 percent.
  3. Orange County, Calif. – 24 percent.
  4. New York City – 25 percent.
  5. San Diego – 28 percent.

Homeownership is a pipe dream for less educated Americans, according to Trulia. The study found that owning a home is out of reach for the less educated in the majority of the top 100 metros. Kolko said:

Even within a local market, affordability depends on where you land in the income distribution; and how much education you have often shapes your income today and in the future. In fact, your education level can matter as much as where you live when it comes to whether you can afford to buy a home.

So if you’re a middle-class American, your prospects for homeownership look pretty good in the Midwest, but you’ve been priced out of the market in much of California and the East Coast.

While this is bad news for many middle-class Americans, it could be worse. According to USA Today:

By historical standards, homes are still relatively affordable as the nation continues to recover from the 2007 housing crash. Nationally, home prices late last year were 20 percent above their 2011 nadir but 21 percent below their 2006 peak, according to CoreLogic Case-Shiller Indexes. … Interest rates remain low. And buying is cheaper than renting in all of the 100 metro areas, Trulia’s study found.

Does it surprise you that the middle class is being priced out of buying a home in many markets? Share your thoughts below or on our Facebook page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
15 Free Streaming Services to Watch While Stuck at Home
15 Free Streaming Services to Watch While Stuck at Home

These free streaming video services offer thousands of movies and TV shows, including recent releases and beloved classics.

Beware These 5 Common Work-From-Home Scams
Beware These 5 Common Work-From-Home Scams

You can spot scammers and con artists with a little know-how.

15 Amazon Purchases That We Are Loving Right Now
15 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

Homeowners Say These 2 Kitchen Appliance Brands Are Best
Homeowners Say These 2 Kitchen Appliance Brands Are Best

One brand takes five of the top honors, while another ranks highest in three categories.

Avoiding These 5 Foods Could Save Your Vision as You Age
Avoiding These 5 Foods Could Save Your Vision as You Age

Millions of Americans may be able to prevent an incurable cause of blindness by making a basic change.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

11 Things Retirees Should Always Buy at Costco
11 Things Retirees Should Always Buy at Costco

This leader in bulk shopping is a great place to find discounts in the fixed-income years.

Over 50? The CDC Says You Need These 4 Vaccines
Over 50? The CDC Says You Need These 4 Vaccines

Fall is the time to schedule vaccines that can keep you healthy — and even save your life.

Why Cloth Masks May Increase Your Coronavirus Risk
Why Cloth Masks May Increase Your Coronavirus Risk

A new study finds that wearing a cloth mask can backfire if you don’t clean it properly.

11 Household Items That Go Bad — or Become Dangerous
11 Household Items That Go Bad — or Become Dangerous

When you get the impulse to stockpile these everyday items, pay close attention to their expiration dates.

8 Things You Can Get for Free at Pharmacies
8 Things You Can Get for Free at Pharmacies

In this age of higher-priced drugs and complex health care systems, a trip to the pharmacy can spark worry. Freebies sure do help.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

The 15 Worst States for Retirees in 2020
The 15 Worst States for Retirees in 2020

Based on dozens of metrics tied to affordability, quality of life and health care, these are not ideal places to spend retirement.

The 10 Most Commonly Stolen Vehicles in America
The 10 Most Commonly Stolen Vehicles in America

A new model parks atop the list of vehicles that thieves love to pilfer.

This Is the Cheapest Place to Buy a Used Car
This Is the Cheapest Place to Buy a Used Car

Looking for a good deal on a set of wheels? This should be your first stop.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

5 Keys to Making Your Car Last for 200,000 Miles
5 Keys to Making Your Car Last for 200,000 Miles

Pushing your car to 200,000 miles — and beyond — can save you piles of cash. Here’s how to get there.

26 States That Do Not Tax Social Security Income
26 States That Do Not Tax Social Security Income

These states won’t tax any of your Social Security income — and in some cases, other types of retirement income.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

10 Reasons Why You Should Actually Retire at 62
10 Reasons Why You Should Actually Retire at 62

If you can, here are several good reasons to retire earlier than we’re told to.

7 Surprising Features That Boost Your Home Value
7 Surprising Features That Boost Your Home Value

You can add value to your home without hiring a contractor to do expensive renovations.

5 Things That Make Life More Meaningful for Retirees
5 Things That Make Life More Meaningful for Retirees

Retirees agree: These are the things that give them purpose and fulfillment in their golden years.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.