For those in the middle class who are seeking a new home purchase, the market discrepancies are vast in determining where a future homeowner will be able to afford a home.
An article this week from Trulia’s Chief Economist Jed Kolko zooms in on several metros to show the percentage of middle-income households that can afford a typical home in their metro area.
In Los Angeles, for example, the typical middle class household can afford to just 24% of the homes on the market, compared with Chicago, where the percentage of middle-income households can afford about three quarters of the homes on the market.
“The typical middle-class household can afford more than 80% of the homes on the market across much of the Midwest but fewer than 30% in San Francisco, Orange County, Los Angeles, New York, and San Diego,” Kolko explains.
While homeownership is within reach in some parts of the country, it’s a “pipe dream” for others, Kolko says, as affordability varies hugely.
“Nationally, home prices still look a bit below their long-term average, and mortgage rates are far below their historical norms – which means that buying a home is still cheaper today than during the housing bubble. But this national average hides enormous differences in what the middle class can afford in each local market.”
Written by Elizabeth Ecker