What’s the most unaffordable place to live in America?
San Francisco, right? Wrong.
It’s Brooklyn. Yep, the place once considered the embarrassing alternative address for would-be Manhattanites, is now less affordable than Manhattan and hot spots like San Francisco and Silicon Valley, according to data compiled by the research firm RealtyTrac.
Affordability is a function of home prices and wages. The average wage earner in Brooklyn would have to pay 121% of their income to own the average home. That unfortunate phenomenon is the result of well-paid people fleeing Manhattan for Brooklyn, which has become hip and socially acceptable in recent years. The increased demand and influx of spending power has driven Brooklyn home prices sky high.
More homes were sold in Brooklyn in the first quarter of 2016 than in the same period in 2015 – at higher prices, too.
The same dynamic explains why two Bay Area locations –Marin County and Santa Cruz — are second and third on the unaffordable list. They are highly desirable alternatives to insanely priced San Francisco and San Jose (the center of Silicon Valley). The average wage earner in Marin would have to pay 118% of her income to buy a house. That figure is 113% in Santa Cruz.
Home prices in Manhattan, San Francisco and San Jose are higher than prices in Brooklyn, San Francisco and San Jose, but residents also make higher wages and salaries.
It’s generally accepted that you should not spend more than 30% of your income on housing. However, the average wage earner currently needs about 35% of their monthly income to pay for a median-priced home in their market. About 20% of U.S. housing markets are “unaffordable,” meaning that buying a median priced house there was less affordable than it was in early 2005.
But that situation is improving due to a slow down in home price increases, some wage growth and lower interest rates.
Here are America’s 10 least-affordable housing markets:
|Marin County, CA||118|
|Santa Cruz, CA||113.5|
|San Luis Obispo, CA||90.4|