In the U.S., it requires an annual income of $87,640 to buy a home at the average price, but the average household income is only $73,164, falling short by 20%.

Additionally, as of the third quarter of this year, only 33.5% of households have the financial ability to purchase a home at the average price, a slight decrease from 34.7% in the previous quarter, indicating that buying a house has become more difficult. This is due to the nationwide median home price of $365,000 in the third quarter, which increased by 1.4% from the previous quarter and 6.6% from the same period last year.

Another reason housing affordability has not improved is that home prices continue to rise faster than wages.

Of the 578 major counties nationwide, 411 counties (71.1%) saw home price growth outpace wage growth. Notable examples include LA, Orange, and San Diego Counties in Southern California, as well as Chicago County.

According to the study, Santa Cruz in Northern California was ranked the most difficult area in the country to buy a home.

In Santa Cruz, home prices amount to 108.5% of the average annual income, making homeownership virtually impossible for anyone other than high-income earners. Other areas in the top five hardest places to buy a home include Kings County, New York (108%), Maui, Hawaii (103.6%), Marin County, Northern California (100.6%), and San Luis Obispo, Central California (97.5%).

In LA and San Diego counties, home prices are at 72.6% and 71.9% of annual income, respectively, meaning more than two-thirds of households find it difficult to purchase a home. In fact, according to the California Association of Realtors (CAR), the home affordability index for LA and San Diego is just 13% and 11% for all households, respectively.

When ranked by the income needed to buy a home, San Mateo County in Northern California tops the list at $384,882, followed by Manhattan, New York, at $371,140, Santa Clara, Northern California, at $360,069, Marin County at $328,530, and San Francisco at $315,157.

According to real estate data firm ATTOM, among U.S. counties with populations of over 1 million, Wayne County, Michigan (where Detroit is located), saw the largest year-over-year median price increase in the third quarter of 2024, rising 12.3%. Suffolk County, New York (home to Long Island), followed with a 12.1% increase, and Philadelphia County, Pennsylvania, saw an 11.8% rise, ranking third.

Among counties with populations over 1 million, Alameda County, California (where Oakland is located), saw the largest drop in median prices from Q3 2023 to Q3 2024, falling 12.8%. Travis County, Texas (home to Austin), was second with a 4.3% drop, followed by Honolulu County, Hawaii (3.9%↓), Collin County, Texas (Plano) (1.9%↓), and New York County, New York (Manhattan) (0.6%↓).

However, the housing industry is hopeful about the continued decline in mortgage rates. With the Federal Reserve (FRB) expected to lower its benchmark interest rates, mortgage rates are projected to continue falling, which could ease the financial burden for homebuyers.

By: Hwandong Cho

<Hwandong Cho>